Libro Tema 4

Introduction to
Social Entrepreneurship
Teresa Chahine
Introduction to
Introduction to
Teresa Chahine
CRC Press
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This book is dedicated to the social entrepreneur inside each one of us.
Contents
Preface: A Letter to the Reader...............................................................................................xvii

Acknowledgments....................................................................................................................xix
Author.......................................................................................................................................xxi
1 Introduction..................................................................................................................1
How This Book Works....................................................................................................... 1
Definitions.......................................................................................................................... 2
Sustainable Development.................................................................................................... 2
Why Is Social Entrepreneurship Different from Commercial Entrepreneurship?................ 3
How Is Social Entrepreneurship Different from Other Forms of Social Progress?............... 5
Terminology....................................................................................................................... 6
Institutions Supporting Social Entrepreneurs..................................................................... 6
Common Characteristics in Social Entrepreneurship.......................................................... 6
What Are Some of the Basic Skills Needed for Social Entrepreneurship?...........................10
How to Use This Book.......................................................................................................11
Interview Box. Bill Drayton, Founder and CEO of Ashoka Innovators
for the Public......................................................................................................... 12
Learning Tools...................................................................................................................13
Modules.............................................................................................................................14
Learning Objectives...........................................................................................................16
Summary and Next Steps..................................................................................................17
Exercise: Your Assignment for This Chapter......................................................................17
Social Ventures Mentioned in This Chapter.......................................................................18
2 Characterizing Your Challenge...................................................................................21
Part One: Introduction......................................................................................................21
Two Important Viewpoints............................................................................................... 22
Seeing the Opportunities............................................................................................. 23
Understanding the Challenges..................................................................................... 23
Scope of This Chapter....................................................................................................... 23
Data Is Power.................................................................................................................... 24
Approaching Your Topic....................................................................................................25
Think Like a Child....................................................................................................... 26
Question All Assumptions........................................................................................... 26
Part Two: A Framework for Characterizing Your Challenge............................................. 26
What Exactly Does This Mean?................................................................................... 26
What Are You Trying to Change?................................................................................ 27
vii
viii ◾ Contents
Who Is Affected?.......................................................................................................... 27
Where Are These People?............................................................................................. 27
Why Has This Challenge Arisen, and Why Has It Persisted?....................................... 28
How Do These Root Causes Affect the Challenge and Its Outcomes?......................... 28
Dimensions of the Social Challenge............................................................................. 28
Dimensions of Data..................................................................................................... 29
Different Types of Data................................................................................................ 30
Prior Attempts to Conquer the Challenge.................................................................... 30
Interview Box. Matt Flannery, Kiva Cofounder and Former CEO; Branch Founder
and CEO...........................................................................................................................31
Part Three: How to Select Your Topic............................................................................... 32
Subject Fields of Interest and Expertise........................................................................ 32
Sociodemographic Setting............................................................................................ 32
Needs-Based Framework.............................................................................................. 32
Access to Resources.......................................................................................................33
Strengths and Weaknesses.............................................................................................33
Passion and Motivation.................................................................................................33
Part Four: Digging Deeper............................................................................................... 34
Collecting Information................................................................................................ 34
Analyzing Your Results..................................................................................................... 36
Summary and Next Steps................................................................................................. 39
Exercise: Your Challenge................................................................................................... 39
3 Co-Creating with the Community..............................................................................41
“Community”—What Does This Mean?...........................................................................41
Piecing Together Pieces of the Puzzle................................................................................ 42
The Social Entrepreneur as a Connector........................................................................... 42
Catalyzing Change........................................................................................................... 43
Who Is Your Starting Team?............................................................................................. 44
Interview Box. Libby McDonald, MIT CoLab Director of Global Sustainability
Partnerships.......................................................................................................................45
Interview Box. Albina Ruiz, Founder and CEO, Ciudad Saludable, Lima, Peru............... 46
Step 1. Assessing Stakeholders for Knowledge Exchange...................................................47
Who Are the Key Players?............................................................................................ 48
Tool: Stakeholder Analysis........................................................................................... 48
Step 2. Community-Driven Research............................................................................... 49
Defining the Agenda.................................................................................................... 49
Understanding the People, Places, Problems, and Potential.......................................... 50
Research Tools............................................................................................................. 50
Research Tips and Techniques......................................................................................51
Step 3. Creating Collective Capacity.................................................................................52
The Goal: Conceptualizing the Solution.......................................................................53
The Process: Mobilizing the Community..................................................................... 54
The Key: Incorporating Local Infrastructure................................................................ 54
Participatory Planning................................................................................................. 56
Where Are the Local Entrepreneurs?............................................................................ 56
Examining Local Supply Chains.................................................................................. 56
Contents ◾ ix
Checklist: AAAQ..............................................................................................................57
Values and Characteristics of Various Stakeholders...................................................... 58
Reflective Practice............................................................................................................. 58
Summary and Next Steps................................................................................................. 58
Exercise: Your Homework..................................................................................................59
Social Ventures Mentioned in This Chapter...................................................................... 60
Case Study: Ciudad Saludable...........................................................................................61
Conclusions...................................................................................................................... 62
4 Designing Your Solution.............................................................................................63
Levels of Innovation.......................................................................................................... 64
Failing Is Part of the Process............................................................................................. 64
Innovation and Design......................................................................................................65
User Driven Design.......................................................................................................65
User Driven = Data Driven...........................................................................................65
Generating Ideas, Models, and Solutions...........................................................................67
Full Immersion..............................................................................................................67
Blended Perspectives......................................................................................................67
Experiment with Different Ideas...................................................................................67
Ask the Right Questions.............................................................................................. 68
Brainstorming Rules.................................................................................................... 68
Deep Reflection vs. Group Dynamics for Design......................................................... 68
Tips and Tricks to Try.................................................................................................. 69
Who Is Your Design Team?.............................................................................................. 71
Building Your Solution..................................................................................................... 72
Analyzing and Organizing Your Options..................................................................... 72
Prototyping.................................................................................................................. 72
Testing.............................................................................................................................. 73
Test, Test, Test! Test It ’til You Break It........................................................................ 73
Piloting Your Product....................................................................................................74
Interview Box. Umesh Malhotra, Founder and CEO, Hippocampus Learning
Centers, Karnataka, India..................................................................................................74
Designing a System around Your Product or Service........................................................ 75
Beyond Design..................................................................................................................76
Your Theory of Change..................................................................................................... 78
Tools to Develop Your Theory of Change..................................................................... 79
Incremental Innovation and Disruptive Innovation Are Not Mutually Exclusive......... 80
Summary and Next Steps..................................................................................................81
Exercise: Your Deliverables............................................................................................... 82
Social Ventures Mentioned in This Chapter...................................................................... 82
Case Study: Hippocampus Learning Centers................................................................... 84
Designing Impact, Scale, and Sustainability................................................................ 84
5 Market Strategy...........................................................................................................87
The Multidimensional Market.......................................................................................... 87
This Little Solution Went to Market............................................................................ 87
Compass: Vision, Mission, Values..................................................................................... 87
x ◾ Contents
Vision........................................................................................................................... 88
Mission........................................................................................................................ 88
Values........................................................................................................................... 89
Value Proposition and Unique Selling Point..................................................................... 89
Market Size: Defining Your Denominator.........................................................................91
Social Market Strategy.......................................................................................................91
Co-Creation................................................................................................................. 92
Product........................................................................................................................ 92
Customer..................................................................................................................... 92
Place............................................................................................................................. 93
Cost............................................................................................................................. 93
Price............................................................................................................................. 94
Competitors................................................................................................................. 95
Positioning................................................................................................................... 95
Promotion.................................................................................................................... 96
Collaborators................................................................................................................ 97
Tool: Business Canvas....................................................................................................... 98
Branding........................................................................................................................... 99
Key Concepts............................................................................................................... 99
Examples...................................................................................................................... 99
Interview Box. Doug Rauch, Founder and President, Daily Table; CEO, Conscious
Capitalism.......................................................................................................................101
Market Research..............................................................................................................102
Summary and Next Steps................................................................................................102
Exercise: Taking Your Solution to Market!......................................................................103
Social Ventures Mentioned in This Chapter.....................................................................104
Case Study: Daily Table...................................................................................................105
Iterating the Business Model.......................................................................................106
6 Delivering Your Solution........................................................................................... 111
Operations and Distribution............................................................................................ 111
What Is Operations?........................................................................................................ 111
Process Mapping.........................................................................................................112
Distribution Models........................................................................................................113
Expanding Your Reach—Different Mechanisms.........................................................113
Expanding Central Production Volume..................................................................113
Opening New Branches..........................................................................................114
Franchising............................................................................................................. 115
Microfranchising.................................................................................................... 115
Nonmonetized Methods.........................................................................................116
Success Factors across Distribution Models......................................................................116
Define Your Core Package...........................................................................................116
Standardize.................................................................................................................117
Automate.....................................................................................................................117
Shorten the Last Mile..................................................................................................117
Foster Local Leadership...............................................................................................118
Decentralize Operations..............................................................................................118
Contents ◾ xi
Tailor to the Local Population..................................................................................... 119

Leveraging Existing Channels..................................................................................... 119
Interview Box. Thulasiraj Ravilla, Executive Director, Aravind Eye Care Systems.......... 120
Strategic Partnerships...................................................................................................... 120
Your Biggest Resource: Your Team..................................................................................121
Building the Team......................................................................................................121
Composition of the Executive Team........................................................................... 122
Do You Have to Be the CEO?.................................................................................... 123
Summary and Next Steps............................................................................................... 123
Exercise: How Will You Deliver Your Solution?.............................................................. 124
Example Social Ventures from This Chapter....................................................................125
Case Study: Aravind....................................................................................................... 127
7 Measuring Impact.....................................................................................................131
Targeting Success.............................................................................................................131
Theories to Results......................................................................................................132
Different Metrics for Different Fields...............................................................................132
What Is ROI?..............................................................................................................132
Quantifying Your Social Investment...........................................................................133
Which Metrics Are the Right Fit for You?...................................................................133
Before You Start.............................................................................................................. 134
Decide Early On........................................................................................................ 134
Measure Inherently.................................................................................................... 134
Don’t Measure Too Much.......................................................................................... 134
Refer to Baseline Data................................................................................................ 134
What to Look for in Your Impact Metrics.......................................................................135
The Comparative Factor..............................................................................................135
Baseline Data..............................................................................................................135
Controlling for Other Factors.................................................................................... 136
Linking to Quality..................................................................................................... 136
Inputs versus Outputs versus Outcomes......................................................................137
Short- versus Long-Term Goals...................................................................................137
Measuring Intermediate Outcomes.............................................................................137
This Is Where You “Cash In” the Benefits of Your Evidence-Based Solution!..............137
Direct versus Indirect Benefits.....................................................................................138
Further Considerations....................................................................................................138
Valuating the Supply Chain........................................................................................138
Management Indicators...............................................................................................139
Build Systems for Data Collection and Analysis..........................................................139
Interview Box. Jake Harriman, Founder and CEO, Nuru International..........................140
Interview Box. Bennadette Mugita, Impact Programs Manager, Nuru Kenya.................141
Building Your Logical Framework...................................................................................142
Step 1: Setting SMART Objectives.............................................................................142
Step 2: Producing Measurable Outputs.......................................................................143
Step 3: Determining the Inputs...................................................................................144
Outlining the Activities Needed to Produce These Outputs...................................144
Estimating the Time and Cost of Conducting These Activities..............................144
xii ◾ Contents
Pros and Cons of the Logical Framework....................................................................145

How to Choose Your Targets...........................................................................................145
To Be Ambitious or to Start Small?.............................................................................146
Setting Up an M&E System............................................................................................146
Assessing Your Results With Your Stakeholders...............................................................147
Exercise: Measuring Success............................................................................................148
Case Study: Nuru International.......................................................................................149
8 Completing the Business Model................................................................................155
Building Your Budget......................................................................................................155
The Basics.................................................................................................................... 155
Forecasting Growth....................................................................................................156
Cost per Unit..............................................................................................................157
Revenue Models...............................................................................................................157
Scenario Analysis........................................................................................................158
Pro-Forma..............................................................................................................158
Timeline and Phasing......................................................................................................160
Staying Lean....................................................................................................................161
Business Models...............................................................................................................161
High-Profit Business...................................................................................................162
Nondividend Social Business......................................................................................162
Not Always Mutually Exclusive...................................................................................162
Hybrid Models............................................................................................................162
Interview Box 1. Jigar Shah, President of Generate Capital, Former CEO
of Richard Branson’s Carbon War Room, and Founder of Sun Edison............................163
Interview Box 2. Muhammad Yunus, Economics Professor, Founder of the Grameen
Bank, and Recipient of the Nobel Peace Prize 2006........................................................165
Uncertainty and Risk.......................................................................................................166
PESTEL Analysis........................................................................................................166
Political...................................................................................................................167
Economic...............................................................................................................167
Social......................................................................................................................168
Technological.........................................................................................................169
Environmental........................................................................................................169
Legal.......................................................................................................................170
Know Your Limitations...................................................................................................171
Tool: SWOT Table..........................................................................................................171
Exercise: Building a Viable Venture.................................................................................172
9 Pitching and Networking..........................................................................................175
Getting the Support You Need to Make This Happen.....................................................175
Why Do You Need a Business Plan?................................................................................175
How to Write a Business Plan..........................................................................................176
Contents ◾ xiii
Executive Summary....................................................................................................176
Business Plan Outline.................................................................................................177
Presenting and Pitching Your Plan...................................................................................178
Your Slide Deck..........................................................................................................178
The Abridged Version..................................................................................................178
Less Is More................................................................................................................178
Your Elevator Pitch......................................................................................................179
Pitching Tips...................................................................................................................179
Find Your Balance.......................................................................................................179
Make a Connection.....................................................................................................180
Get Them to Ask Questions........................................................................................180
Know When to Ask Questions....................................................................................181
Common Mistakes to Avoid........................................................................................181
Advice for Introverts....................................................................................................182
You Can Be Humble and Promote Your Work at the Same Time...............................182
Building Your Network...................................................................................................182
So You’ve Got Your Business Plan … Now What?...........................................................185
Surround Yourself with Supporters..............................................................................185
Assemble Your Advisory Board....................................................................................185
Start Fundraising!.......................................................................................................186
What Is an “Ask”?.......................................................................................................187
Interview Box. Willy Foote, Founder and CEO, Root Capital.........................................188
Finding Your Tribe..........................................................................................................190
Mentors and Coaches..................................................................................................190
Coworking Spaces.......................................................................................................190
Incubators...................................................................................................................191
Accelerators.................................................................................................................191
Boot Camps................................................................................................................192
Other Networks..........................................................................................................192
Fellowships..................................................................................................................192
Events..........................................................................................................................192
A Word of Caution......................................................................................................193
Exercise: Putting It Down on Paper.................................................................................193
10 Funding Your Venture...............................................................................................195
Creating Your Resource Dashboard.................................................................................195
Sources of Funding..........................................................................................................197
Governments...............................................................................................................197
Multilateral Agencies...................................................................................................197
NGOs.........................................................................................................................198
Foundations................................................................................................................198
Investment Funds........................................................................................................199
Individuals..................................................................................................................199
CSR........................................................................................................................... 200
Types of Funding.............................................................................................................201
xiv ◾ Contents
Donations...................................................................................................................201
Grants.........................................................................................................................201
Awards....................................................................................................................... 202
Loans......................................................................................................................... 202
Equity........................................................................................................................ 203
Interview Box. Sir Ronald Cohen, Chair, Portland Trust; Chair, Global Social
Impact Investing Steering Group; Cofounder and Former Chair, Big Society Capital.... 204
Social Investment Approaches......................................................................................... 205
Crowdfunding........................................................................................................... 206
Philanthropy.............................................................................................................. 206
Impact Investing........................................................................................................ 207
Socially Responsible Investors.................................................................................... 207
Finding the Right Approach for You............................................................................... 208
Exercise: Funding Your Venture...................................................................................... 209
11 Building the Organization........................................................................................213
Legal Structure................................................................................................................213
When to Register........................................................................................................213
Legal Options.............................................................................................................214
Charity........................................................................................................................214
Social Enterprise..........................................................................................................215
For-Profit.....................................................................................................................216
Hybrid Setups.............................................................................................................216
Cooperatives...............................................................................................................217
Variations around the World.......................................................................................218
Weighing the Pros and Cons.......................................................................................218
Interview Box. Catlin Powers, Cofounder and CEO, One Earth Designs...................... 220
Organizational Health.....................................................................................................221
Financial Health........................................................................................................ 222
Taxes.......................................................................................................................... 223
Reporting................................................................................................................... 223
Internal Governance................................................................................................... 224
Transparency.............................................................................................................. 224
Accountability............................................................................................................ 224
Decision Making........................................................................................................ 225
Documenting Institutional Memory.......................................................................... 225
Manuals................................................................................................................. 225
Policies and Procedures.......................................................................................... 226
The Board....................................................................................................................... 226
Why You Need a Board.............................................................................................. 226
What to Look for in the Board................................................................................... 227
Leadership beyond the Founders..................................................................................... 228
Exercise: Reflections........................................................................................................ 229
Social Ventures Mentioned in This Chapter.................................................................... 230
Contents ◾ xv
12 Communications.......................................................................................................233
Communicating Your Venture.........................................................................................233
What Are the Different Components in Your Communications?.................................... 234
The “Who” and the “Why”............................................................................................. 234
Communicating with Your End Users—Selling Your Product or Service.................. 234
Communicating Internally—Information Flow within Your Team........................... 234
Communicating with Stakeholders—Reporting Back................................................235
Communicating Externally—Advocating and Spreading Your Impact...................... 236
Building a Goal-Oriented Communications Plan...................................................... 236
Interview Box. Laila Iskandar, Cofounder, Mokattam School and A.P.E. Rug
Weaving Center; Minister of Urban Renewal and Informal Settlements, Egypt............. 237
The “What”.................................................................................................................... 237
Messaging.................................................................................................................. 238
What Action Do You Want Each Audience to Take?............................................. 238
What’s in It for Them?........................................................................................... 238
Stakeholder Ladder................................................................................................ 238
Follow-Up.............................................................................................................. 238
Multidimensional Messaging................................................................................. 239
The “How”...................................................................................................................... 240
Social Media.............................................................................................................. 240
Multimedia and Interactive Media..............................................................................241
Publications.................................................................................................................241
Mailing Lists.............................................................................................................. 242
Face Time.................................................................................................................. 243
Surveys and Feedback Forms...................................................................................... 243
Evaluate Your Communications..................................................................................... 243
Different Strategies Needed for Different Settings.......................................................... 244
Different Skills Needed for Different Stages................................................................... 244
Tips and Pointers across Audiences, Media, and Messages...............................................245
Be Positive...................................................................................................................245
Be Thoughtful............................................................................................................ 246
Keep It Personal......................................................................................................... 246
Keep It Simple............................................................................................................ 246
Evoke Emotion............................................................................................................247
Summary and Conclusions............................................................................................. 248
Exercise: Your Communications Strategy....................................................................... 248
13 Managing Growth.....................................................................................................253
Part One: Achieving Scale...............................................................................................253
Dimensions of Growth................................................................................................253
Scaling Your Operations—What to Assess............................................................ 254
Scaling Inputs versus Outputs versus Impact..........................................................256
Gathering New Information and Innovation as You Grow.....................................258
Disadvantages and Tradeoffs..................................................................................259
Threats of Expansion..............................................................................................259
Is It Possible to Outgrow Your Mission?................................................................ 260
xvi ◾ Contents
Disclaimer............................................................................................................. 260
There Is No Black and White.................................................................................261
Part Two: Beyond Scale...................................................................................................261
What Does It Mean to Reach Your Goals?..................................................................261
Don’t Get Swept Away.................................................................................................... 262
Reverse the Tide: Changing the Way Business Is Done.................................................. 262
Changing the Field You’re Playing In.............................................................................. 263
Expanding Your Scope of Impact................................................................................... 263
Seeing the Forest from the Trees..................................................................................... 264
Inside vs. Outside Your Venture..................................................................................265
Mechanisms for Expanding beyond Your Venture...........................................................265
Setting New Trends....................................................................................................265
Collaboration with Other Organizations................................................................... 266
Government Adoption............................................................................................... 266
Advocacy and Policymaking.......................................................................................267
Collective Impact....................................................................................................... 268
Interview Box. Sir Fazle Abed, BRAC Founder and Chairperson................................... 268
Building a Culture of Change......................................................................................... 269
Sharing Failures......................................................................................................... 269
Sharing Successes........................................................................................................270
Don’t Forget the Underlying Theory...........................................................................270
Don’t Forget to Celebrate Your Successes!...................................................................270
Avoiding a Bubble............................................................................................................271
Recap...............................................................................................................................271
Taking the Next Steps Together...................................................................................... 272
Exercise: Fueling Growth................................................................................................ 272
Social Ventures Mentioned in This Chapter.................................................................... 273
Preface: A Letter to the Reader
All entrepreneurship is social. As a mentor of mine once said, “Unless you’re trading illegal or
harmful substances, you’re producing positive social outcomes by creating jobs, building the econ-
omy, and advancing human capacity.”
The reason we use the terminology of social entrepreneurship, and the reason it has devel-
oped into a field of its own over the past decades, is that despite all the commercial entre-
preneurship out there, despite all the industry and business and enterprise, there are still
huge chunks of the human population without basic human needs. Water, sanitation, educa-
tion, and basic health services and knowledge, which most of the world’s population take for
granted, are still today, in the midst of the third millennium, inaccessible for over a billion
people.
Most readers would agree that governments carry the primary charge for meeting these basic
needs and in most cases have already pledged in writing to do so. The purpose of this book is not
to divert resources and attention away from the government sector. The purpose of this book is to
acknowledge that individuals can make, and have made, a huge difference to underserved popula-
tions. Social entrepreneurs around the world have created and implemented effective, scalable, and
sustainable solutions to the most basic of human challenges. While their work is unique each in
its own context, we have gleaned lessons from their successes and failures.
Understanding the social challenges we are facing; co-creating solutions with the community;
creating products and services in contexts not currently served by the markets; building resilient
business plans around those products and services while adhering to the social mission; mobiliz-
ing financial, human, and other resources; and building initiatives and organizations that work to
maximize social impact—these are the basic frameworks we have seen to maximize the chances
of success of a social venture.
In this book, you will see many different models, examples, and ways of thinking about social
entrepreneurship. These have been compiled into a framework that will help you start taking the
first steps toward figuring out your own model. The only thing I need you to understand unequiv-
ocally is this: There is no one model that can solve all the world’s problems. I don’t know much,
but I do know this for sure. We as a human race just have not figured it out yet.
So the purpose of this book is not to teach you how it’s done or to present a winning formula.
It’s to share with you the collective human knowledge that has been created from numerous
attempts, failures, and accomplishments to date. From here on out, it’s up to you. The purpose is
not for you to take these approaches, learn them, and copy and paste them. The goal is for you to
completely disrupt them, question them, and find new ways of doing things.
What you are tasked with is taking this knowledge that we have collectively created up until
now and completely hacking it! Knock it out of the ball park. Make it irrelevant. I want you to
xvii
xviii ◾ Preface
take this framework, apply it, and then discover new things that prove me entirely wrong and
come up with new answers of your own. Leave no assumption unquestioned.
You might come up with something along the way that completely obliterates everything I
have written in the book. I hope so. Because this is how human knowledge progresses. This is how
we figure things out as a race.
Acknowledgments
This book was co-created by all the social entrepreneurs profiled here, and so many more. The
only credit that would be accurate for me to accept is that I’m just the big nerd who sat down and
typed it all out. The content is based on the work of countless people over countless years who
have developed and implemented effective, scalable, and sustainable solutions to social challenges.
Most importantly, this book was co-created with my students. Based on my course at the
Harvard T.H. Chan School of Public Health, each week was turned into a chapter, and chapters
were read and commented on by students. The course content itself was also developed with feed-
back from students, which is further reflected in the book’s content. Emily Holleran, who at the
time of writing, was a graduate student at Harvard University Division of Continuing Education,
has been a stellar collaborator and no words can thank her enough. Emily, I don’t know what to
say. At the time of writing, in this moment, you are literally my favorite person in the whole world.
(Sorry, Mom!)
Because this book is based on a course, thanks are due to all who made that course pos-
sible: Jack Spengler, who kept me around for all these years (I’m still trying to figure out why!)
and opened countless doors, the least and most humble of which was the funding of the course;
SV Subramanian, who served as a long-standing mentor, supporter, and faculty sponsor without
whom none of this would have happened; Nancy Turnbull, who helped me start the process by
deciding that “yes, we need a course like that here!”; Michelle Bell, who guided me on curriculum;
Rick Siegrist, who shared his expertise, guidance, intellectual, and moral support; Nancy Kane,
who has been so generous with her time in helping me develop my writing and teaching skills.
I’d also like to go a little more upstream than that to thank Jon Levy, Amy Cohen, and Donald
Halstead, without whom I never would have gotten my doctoral degree in the first place to do
all this.
Last but not least, the course on which this book is based was developed out of my experience
at the Massachusetts Institute of Technology (MIT), as an honorary fellow (translated: tag-along)
in the Legatum Center, thanks to Geoffrey Groesbeck, who was the fellowship director at the
time. I wanted to replicate the experience for others at my alma mater who had not had the oppor-
tunity, and to create the same kind of knowledge at our home base where people convene from all
over the world to solve the most pressing challenges affecting the well-being of our planet and its
population. Thank you also to MIT’s Elizabeth (Libby) MacDonald for your support in launching
and participating in this course year after year as a guest speaker, for being so generous with your
materials and content, and for providing a role model for my students and myself.
The secret I’ll reveal here is that this textbook would not exist were it not for Professor Omar
Bagasra, my mentor and friend, who turned to me as an afterthought as we were about to part
ways following a meeting and said, “Hey, by the way, why don’t you write a book?” He subse-
quently did much more than that by helping me structure the proposal, contact the publisher, and
xix
xx ◾ Acknowledgments
compartmentalize my time to get it all done. Most importantly, he taught me how to nurture my
mind and my soul.
Without my family at Alfanar venture philanthropy, none of this would have any meaning.
Thank you for providing me with the platform to practice what I preach and working to improve
the lives of the most marginalized populations. This thanks goes both to the team, who not only
tolerate but also appreciate and share my quirks and insanities, and to our investees, who are my
day-to-day coworkers in Lebanon. You are what all this is about. Last but not least, I’d like to
thank Bader Young Entrepreneurs Program and team and MIT Enterprise Forum Pan Arabia
for hosting Alfanar Lebanon and me in their beautiful Coworking+961 space. I truly believe that
place matters and that surroundings inspire. The opportunity to incubate my thoughts, and this
book, in a serene oasis had a direct impact on what I produced, and I am infinitely grateful for
that experience. Thank you for bearing with me and nurturing my need for deep concentration.
Tracing this all back to the root cause, ultimately, the largest thanks go to my parents. Realizing
that not every student reading this book will have this ingredient to success, people who literally
believe that you can do anything, I have tried to infuse this message into the book and serve as
that person for my students. The source of all this is the two people who have infused me with
this belief since my inception, constantly and repeatedly, without blinking. Thank you also to my
dear sisters, who by far surpass me in their own writings, dreams, and achievements. I’m so lucky
to have you, and you mean more to me than anything. Without you, I would not have done half
of this, and I hope you know it. My friends and soul mates who have kept me sane, who not only
humored me but also fueled me with their ideas, laughter, thought questions, and encourage-
ment: I sometimes feel as if I’ve cheated, and one day someone will come up to me and recall you,
because it’s not possible to have scored the company of such celestial beings to share life’s journey
with. This is the meaning of life, taking care of those around you, and trying your best to collec-
tively leave behind a world with more beauty and justice than when you started.
Author
Teresa Chahine is the Social Entrepreneurship Program Leader at

Harvard T.H. Chan School of Public Health, Center for Health and the
Global Environment. She teaches social entrepreneurship at Harvard
Chan School and Harvard Extension School, and trains social entrepre-
neurs worldwide. Dr. Chahine is also the director of Alfanar Lebanon,
which she launched in 2012. Alfanar is a venture philanthropy organiza-
tion that has been supporting social entrepreneurs in Lebanon and Egypt
Photo by Thomas Morgan,
since 2005. To learn more about her work and how you can get involved,
Reframed Pictures.
visit www.chgeharvard.org and www.alfanar.org.
Connect with her on Twitter @teresachahine.
xxi
Chapter 1
Introduction
Do you ever wonder what the world would be like if each person dedicated a large chunk of their
brains, efforts, and resources to solving a set of social challenges? Have you ever wished that you
could make a difference about the social disparities and injustices you care about? Many of us,
whether living in one of the world’s least developed or one of the world’s most developed societ-
ies, find it hard to ignore suboptimal conditions that affect us and those around us. These could
be local conditions or global conditions. They could include environmental degradation, pollu-
tion, corruption, lack of access to education or healthcare, and many others. In some cases, such
conditions affect everyone; in most cases, they disproportionately affect the most vulnerable and
underserved populations in our society.
How can we do something to change the face of these challenges? Each one of us has the
potential to make a positive impact on a person, community, and social challenge. Certainly, the
root causes of society’s most pressing problems are complex, historical, and multifaceted, and it
would be a gross simplification to say that one person can solve all the root causes. However, it is
the lack of acceptance of the status quo that has driven many of the positive social changes and
advancements over time. A systematic questioning and examination of why things are the way
they are today, coupled with the tools and skills to investigate, formulate, and apply potential solu-
tions, may allow us to take the first step in making changes.
If you envision a world that functions differently from what you see today, there is a social
entrepreneur in you. Each one of us has the potential to apply our skills and resources to create
better systems, services, and products that are lacking today or that are not accessed by a portion
of peoples and populations. This book will help you get started in assessing the potential paths you
can take to make the change you desire to see. Where you end up may be some place completely
different from what you envisioned or ever thought you could imagine. The only way to find out
is to get started… So, let’s begin!
How This Book Works

This book is designed to help you create social ventures to address a social challenge of your choice.
The word social here is used to refer to both social and environmental challenges. No matter your
background, age, qualifications, or field of study, there is a core set of skills that can aid you in
1
2 ◾ Introduction to Social Entrepreneurship
making a difference to improve the lives of underserved populations and help preserve or regener-
ate the earth’s resources.
What social or environmental challenges do you care about? What resources could you mobi-
lize to address those challenges? In this book, we will explore together the journey taken by a social
entrepreneur in developing and implementing a solution to a pressing social or environmental
problem or opportunity. In this introductory chapter, we will discuss the difference between social
entrepreneurship and traditional activism, charity, or social work and the difference between social
entrepreneurship and other forms of entrepreneurship. We will also review the blueprint of subse-
quent chapters and introduce some of the skills that will form the focus of our journey together.
Definitions
For the purposes of this book, we define social entrepreneurship as the process by which effective,
innovative, and sustainable solutions are pioneered to meet social and environmental challenges.
A social entrepreneur is someone who designs and implements an intervention, product, or service
that improves the well-being of marginalized individuals and populations. A social enterprise is an
organization (either nonprofit or for-profit) that is formed to meet a social or environmental chal-
lenge, that streamlines its operations and supply chain to maximize social impact and minimize
the use of resources, and that uses a sustainable, replicable, and potentially scalable business model.
Social entrepreneurship is a burgeoning field of study as today’s generation of students and
young professionals question the assumptions, work, and governance patterns set forth by previ-
ous generations. Why do we still have poverty? Why are we polluting and depleting our increas-
ingly scarce natural resources? Many students and professionals today are applying a “can do”
attitude of ending the social and environmental problems that have persisted for generations.
With the increase in technology and access to information, it is not unthinkable that this may be
possible. Increasingly, midcareer and seasoned executives and retired professionals are integrating
social entrepreneurship into their careers or even launching new careers, applying the skills and
experiences they gained over years and decades on the job to tackling social challenges.
As a field of practice, social pioneers have been implementing effective and innovative social
interventions since the beginning of human society. However, only recently have the science and
study of social entrepreneurship evolved and its terminology and methodology been integrated into
general education and continuing professional education. Attention toward social entrepreneurship
began to increase at the turn of the millennium as the successful entrepreneurs of Silicon Valley
began to turn their talents and energies to tackling social challenges. It increased further with the
development of microfinance techniques, which became popular both online (such as Kiva.org,
pioneered by former Paypal.com entrepreneurs in Silicon Valley) and in remote rural areas (such
as the Grameen Bank, which received worldwide acclaim and won the Nobel prize for providing
banking to women living in poverty in rural Bangladesh). Today, business practitioners, nonprofit
practitioners, governments, and grassroots movements worldwide are clamoring to join the social
entrepreneurship movement, whereby private sector practices are applied to solving social problems.
Sustainable Development
In this book, we address social entrepreneurship in the context of sustainable development. In
order to develop an intuitive understanding of what this term means, it is helpful to break it down
Introduction ◾ 3
Economic
Social
Environmental
Figure 1.1 Growth in multiple directions and dimensions is the path to sustainable development.
into its parts. The word development is synonymous with growth (e.g., an embryo can develop into
a full-grown adult, a start-up can develop into a large organization, a romance can develop into
a lifelong partnership). The word sustainable means something that can last. Sustainable develop-
ment means the growth of society in a direction that won’t run into a wall. To keep growing, it is
important to have an increasing or at least ongoing supply of resources, including financial, physi-
cal, environmental, and human resources.
Historically, it has often been that development of one component of society takes place at the
expense of another, whether economic growth at the cost of environmental degradation, resulting
in depletion of resources, or growth of one nation at the cost of another, or growth of social sub-
populations at the cost of others within the same nation. This is still ongoing in our world today,
but many people across sectors—in governments, in the corporate world, and in civil society and
academia—are increasingly focused on ensuring that it is the sum of economic, social, and envi-
ronmental growth that is considered as the ultimate goal (Figure 1.1).
Why Is Social Entrepreneurship Different

from Commercial Entrepreneurship?
Many schools of thought point toward the positive social effects of any form of entrepreneurship.
If an innovative and pioneering person or company produces a purely commercial product—let’s
take the initial creation of the mobile phone for use in developed markets—is this not social? Does
it not produce benefits to society such as increasing communication, providing access to informa-
tion, creating jobs, and many others? The answer is absolutely yes, most commercial enterprises do
in fact produce the kind of positive social changes necessary for sustainable development!
Then why differentiate between social and other forms of entrepreneurship?
To clarify, social entrepreneurship refers to ventures and interventions targeting underserved
populations, decreasing the gap between those who have access to social services and those who do
not (see Figure 1.2). While commercial entrepreneurship often responds to a market opportunity,
Normal population distribution Shift the tail end to narrow the gap
Little/no Plentiful Little/no Plentiful

access access access access
(b)
Shift the existing distribution to increase overall access Both
Little/no Plentiful Little/no Plentiful

access access access access
(a) (c)
Figure 1.2 Targeting access to underserved populations to (a) shift the distribution of the popu-
lation curve, (b) shift the tail to narrow the gap, or (c) both.
100% social 100% commercial
Nonprofits Hybrid models For-profits
Universe of
social
entrepreneurship
Figure 1.3 Social entrepreneurship occupies a spectrum.
social entrepreneurship often tackles a market failure. While the bottom line of a commercial
enterprise is financial profit, the bottom line of a social enterprise is the social impact it creates (we
will talk more about how to measure social impact in Chapter 7).
Before we proceed, please understand this: It is not black and white, and there is no neat
line that cuts off social from other forms of entrepreneurship. Social ventures occupy the space
between old-school commerce and old-school charity. In many societies around the world, there is
a huge gap between social purpose organizations and businesses, and social entrepreneurship aims
Introduction ◾ 5
to fill that gap (Figure 1.3). So open your mind and don’t be categorical. At the end of the day,
what we’re talking about here is a spectrum rather than a discrete category.*
How Is Social Entrepreneurship Different

from Other Forms of Social Progress?
Social entrepreneurship is a form of social service and, like all forms of social service, is a path
toward positive social change to improve the conditions, livelihoods, and standard of living of
populations and ecosystems. Positive social change comes through multiple pathways, which can
include advocacy, lobbying, awareness campaigns, policy papers, research, teaching, legislative
changes, etc. Social entrepreneurship is simply one of these pathways and is characterized by the
application of business methods to providing social products or services. While a researcher may
write about a problem or analyze population data, an activist may create awareness through a
social media campaign, and a case worker may accompany one person at a time or one family at a
time out of poverty by connecting them with resources, a social entrepreneur will link these pieces
of the supply chain together and deliver a service, product, or system that can be scaled to reach
many people over a short period in a financially sustainable way.
This is well described in a short piece written by Dr. Larry Brilliant (who cofounded Seva
Foundation, providing affordable technology to millions by driving down the cost of a sight-restoring
operation) in a special series of essays published by the Stanford Social Innovation Review in 2013 on
the 10th anniversary of its founding.† That is not to say that a social entrepreneur can solve all of the
world’s problems. Each piece of the supply chain and each of these and other different methodologies
are a crucial component of the path to change. “No one can solve all the world’s problems,” as pointed
out eloquently by Roger Martin, board member of the Skoll Foundation, in the same dialogue.‡
Social innovation can come in many shapes and forms. Oftentimes, a person working in an
existing institution such as a government agency, large nongovernmental organization (NGO),
or company comes up with or hears about a novel idea involving an innovative way of doing
things differently from how they’ve always been done in that institution and decides to implement
this new idea. That person can be an “intrapreneur,” creating change within an existing entity
and disrupting the status quo. Many of the leading corporate sustainability and corporate social
responsibility (CSR; which we’ll learn more about in Chapter 10) programs of the world’s leading
businesses were started by someone who stopped and asked, “Why do we do things the way we
do?” Questioning the status quo, questioning all assumptions, and finding new ways of doing
things are all possible without launching a new initiative or starting a new organization.
This is well captured in a story told time and time again by employees of the nonprofit orga-
nization City Year. This nonprofit was started by two college roommates looking to make a differ-
ence in the lives of inner city youth, who eventually built an organization around getting college
graduates to work for one year in a public school in a low-income neighborhood; applying their
skills, talents, and fresh perspective to transforming the lives of students in that school.§ While the
* Gratitude goes to my wise friend and colleague Caterina Hill at Harvard Medical School, who responded with
this beautiful blunt exclamation while I was explaining my topic of passion to her: “It’s a spectrum!” thus help-
ing me put it quite simply into words. Sometimes, the most obvious things are the hardest to put our fingers on!
† http://www.ssireview.org/articles/entry/fifty_years_of_social_change.
‡ http://www.ssireview.org/articles/entry/the_trouble_with_winning.
§ For more information on City Year, visit http://www.cityyear.org.
story takes its roots from an essay published in 1969 by Loren Eiseley, over the years, it has evolved
as different employees and enthusiasts tell their own versions and add their own twists to the story.
Here is one version: The story tells of a young girl who lived in a seaside town and was walking by
the shore with her grandmother one day. She saw a beautiful starfish, with five bright tentacles,
washing up onto the shore. The starfish eventually died, and changed color, and turned into stone.
This upset the girl very much, and she asked her grandmother why this has to happen. Why does
the starfish have to die? “Well, that’s just how it’s always happened around here,” the grandmother
replied. The girl thought about it and decided that was not reason enough for her. The next time
she saw a starfish washing up onto shore, she lifted it and tossed it back into the water.
Decades later, that same girl strolled with her own grandchild by the sea. The grandchild looked
over to the shore and noticed dozens of people all walking along the shore, bending down to pick up
starfish and tossing them back into the sea. The child was puzzled and turned to his grandmother and
asked, “What are those people doing? Why are they putting the starfish back into the water?” The
grandmother simply smiled and replied, “Well, that’s just how it’s always been done around here.”
Terminology
You may have noticed by now that the terms social enterprise, social venture, and social start-up are
often used interchangeably to refer to an organization whose primary purpose or product advances
social and/or environmental well-being and that operates using a financially sustainable model
(Table 1.1). In this book, we will stick to the term social venture to emphasize the notion that it’s up
to you to create an entirely new model for social change—it can be a new initiative, an initiative
within an existing organization, a new organization, or a project.
Institutions Supporting Social Entrepreneurs

You are about to embark on a journey that will hopefully last a very long time and evolve over the
years. You should know that you are not alone! Many individuals and institutions believe in the
power of social entrepreneurship to make a difference. There are numerous organizations, forums,
networks, listservs, conferences, and events bringing together social entrepreneurs and those sup-
porting them all over the world. Support can come in the form of investment, technical support,
knowledge exchange, awareness, and advocacy. We will go into more detail about these different
resources in later chapters, but for now, it’s a good idea for you to surf around on the websites of
some leading institutions in the social entrepreneurship space. Check out a list of a few popular
examples in Box 1.1. Resources posted on these websites will prove invaluable to you as you
develop your own venture, and once it is developed, you might be able to join one of the fellowship
programs or other networks.
Common Characteristics in Social Entrepreneurship

At the end of the day, the distinction between social entrepreneurship and other forms of social
innovation is not black and white, and oftentimes, these terms are used interchangeably. What
is important to focus on are the characteristics that have been observed in successful social ven-
tures. Whether you are starting your own new venture or creating change within an existing
Introduction ◾ 7
Table 1.1 What Is a…?

Start-up A new company or organization
Social start-up A new company or organization that was formed with the primary
purpose of tackling a social or environmental challenge
Social enterprise A company or organization that provides a social product or service at

a fee. The main differences between a social enterprise and
commercial enterprise are the nature of the product or service, the
fee, and the distribution channels, all of which are crafted to
maximize access for underserved individuals and populations
Social venture This term is used broadly to refer to any social initiative, which can
include an organization, project, or initiative working toward positive
In this book we focus on social and environmental change. It is often used interchangeably
social ventures — you decide
the shape and form! with the above terms and has less defined attributes attached to it
Social entrepreneur Someone who designs and implements a new method, process,
product, or service that addresses a social or environmental
challenge
Social intrapreneur Someone who designs and implements a new method, process,
product, or service within an existing organization to address a social
or environmental challenge
Social innovation The act of pioneering new methods, processes, products, and services
that address social and environmental challenges
Social The act of pioneering new methods, processes, products, and services
entrepreneurship that address social and environmental challenges through the
creation of new organizations or initiatives
Don’t let these terms confuse you and don’t get hung up on the hair-splitting differences among
them!
BOX 1.1A SELECT INSTITUTIONS SUPPORTING

SOCIAL ENTREPRENEURS
There are numerous institutions worldwide that were formed to mobilize resources (knowl-
edge, people, funding) for social entrepreneurs. Below are some of the most active organiza-
tions which could serve as a resource for you. Check them out, and see if you can find others!
(in alphabetical order):
Acumen. Impact investing fund based in NY, operating in East Africa, Southeast Asia,
South America
Alfanar. Venture philanthropy organization based in London, operating in Egypt and
Lebanon
Ashoka. Fellowship program and global network of changemakers headquartered in
Washington, DC
Aspen Institute. Education and policy studies organization with fellowships and leader-
ship networks
Echoing Green. Fellowship and Investment Program based in NY and operating globally
CASE. Center for Advancement of Social Entrepreneurship at Duke University, open to
entrepreneurs worldwide
Nesta. UK-based innovation, research, and investment charity
REDF. Investing and knowledge building organization with online workshop containing
resources and tools
Sankalp Forum. Annual summit and awards based in India, convening innovators and
investors worldwide
Schwab. Switzerland-based foundation providing networking opportunities and plat-
form for social entrepreneurs
SE Hub. Social Entrepreneurship Resource Hub at Stanford University, open to social
entrepreneurs worldwide
Skoll Network. Includes Foundation, Awards, Global Threats Fund, World Forum, and
Oxford Centre
SOCAP. Social Capital Markets, an organization bringing together social investors
and social entrepreneurs an through annual event series, media platform, and online
community.
Social Enterprise Coalition. UK national body for social enterprise, membership services
and online advice
Social Innovation Forum. Boston-based accelerator program for innovators and investors
UnLtd. UK-based organization providing support and resources for social entrepreneurs
nationwide and online
BOX 1.1B OTHER POPULAR ONLINE RESOURCES

A multitude of online resources and repositories are available to support social entrepreneurs
at various stages of their journey. Here are some of the most popular that we think you
might enjoy! Check out these three websites in addition to those listed above:
D.I.Y. Toolkit. Social entrepreneurship planning tools and templates from various sources
Root Cause. Research institute generating valuable data and “how to” resources such as
business planning
S.E. Toolbelt. Online hub where you can download resources on various topics
organization, it is helpful to be familiar with and keep in mind the key characteristics that are
most likely to result in an effective, scalable, and sustainable social impact.
First, think of your social venture as a start-up. In the business world, a start-up is a new com-
pany that is formed to introduce a new product or service that aims to penetrate the market and
gain a share of the existing consumers or add a new customer base to the market. Like any start-up,
a social start-up is characterized by an ambition to impact a large number of lives, to scale rapidly,
and to transform or disrupt the status quo.
An example of this is one of the first of many social start-ups growing out of Silicon Valley after the
tech boom of the early millennium, Kiva, which linked people in high-poverty nations with people in
high-income nations via the Internet, allowing them to lend and borrow money. By providing access
Introduction ◾ 9
to the savings of everyday people in the United States, who were returned their money after a speci-
fied period of time with adjustments for inflation, this start-up allowed low-income individuals and
communities around the world to lift themselves out of poverty by making the purchases necessary to
increase their productivity and income. Founded in 2005, Kiva began with seven loans, which were
repaid within six months. During its first year, the organization facilitated half a million US dollars
in loans, scaling to almost $100 million in its fourth year. By its eighth year, Kiva had facilitated
$400 million in loans, from one million lenders to one million borrowers in over 200 countries.*
This brings us to another important point. A social venture can be for-profit and it can be non-
profit. It is not defined by the business model but by the financial viability of the venture and the
allocation of revenues. Some ventures may have room for profit, whereby end users are charged a
fee for the social product or service provided, and this fee is enough to cover the costs incurred in
providing that product or service. In such cases, profits are reinvested back into the venture, to reach
more people. That is not to say that the social entrepreneur and others working to provide the social
good are not remunerated. To attract and retain top talent and provide the highest quality prod-
uct or service possible, it is important to offer competitive salaries and other incentives. The main
distinction is that after the predetermined salaries and remunerations are allocated, profits from a
social venture go back into scaling the social impact, rather than benefiting the social entrepreneur.
Other social ventures may not have room for profit; in many cases, the market value of the prod-
uct or service or the willingness-to-pay of the target population may not be enough to cover the costs
incurred in providing it. This is often the case in the social sector, as many of the problems we are trying
to address result from market failures or externalities, and costs of reaching underserved populations
are often disproportionately high due to weak systems and infrastructure. In such a case, the revenue
generated by the social venture is complemented with external sources such as grants, donations, and
crowdfunding. We will go into more detail about various business models and financing mechanisms
for social ventures in Chapter 10. There are many business models for success in social change, and
choosing the right one depends on the product or service in question, the setting in which it is pro-
vided, the target population, supply chain, and many other factors. In Kiva’s case, the lender is invited
to add an optional “tip” of 15% while making a loan online, helping to cover operating expenses.
While financial viability is a key to success, in social entrepreneurship, it is considered a means to
an end and not an end in itself. The end goal and the only bottom line of a social venture is its social
impact. What are the characteristics that determine whether the social impact is effective, sustain-
able, and scalable? An effective social venture is built around a solution that is evidence based. This can
begin with an idea that has not been tested and that has been developed through a small pilot project
to determine what works and what doesn’t before scaling into a larger growth stage. This involves
collecting data to measure the social impact, in order to deliver the social product or service using
the formula that has been proven to work best for the target population based on current knowledge.
While financial viability is a key to success, in social entrepreneurship, it is considered a

means to an end and not an end in itself. The end goal and the only bottom line of a social
venture is its social impact.
When developing this product or service, a social entrepreneur will aim to tackle the root
causes of a problem where possible rather than its symptoms. Many development efforts over time
* For more information on Kiva, visit www.kiva.org.

have tried and failed to solve a social ill by putting a band-aid on the wound rather than healing
it. While the (metaphorical) band-aid is sometimes needed and sometimes the only choice, social
entrepreneurs need to ask when defining the challenge we are setting out to tackle, why do we face
this challenge today? Does my solution tackle the root cause, or is there an upstream factor I could
reach for instead? One of the tools that social purpose organizations have used over time to build
their programming is a logical framework, as we will see in Chapter 7. A helpful result of using
such frameworks is that it pushes the planner to ask “why?” If a social entrepreneur aims to get
more girls into school, the first question asked is “why are they not in school?” If, for example, one
of the primary reasons is that they are spending hours each day collecting water for their families
and are thus not able to attend school, the next question is “why are they spending hours a day
collecting water?” What are some ways we can increase access to water for that population, or
what are some ways in which we can design collection methods that decrease the amount of time
collecting water? The answers to these questions require skills in design and in costing and most
importantly require information about the local setting, geography, society, and culture.
The number 1 rule of social entrepreneurship is: Do not let your desire to be a social entre-
preneur become a delusion of grandeur, superiority, or supernatural powers!
This brings us to the next important point. For a social product or service to be effective, acces-
sible, and scalable, a key factor that increases the likelihood of success is designing the product or
service with input from the target population. Any social entrepreneur who thinks he or she can
enter a community with the perfect solution in mind and implement it as is will most likely fail.
The most likely solutions to stick are the ones that come from within the community. The number
1 rule of social entrepreneurship is: Do not let your desire to be a social entrepreneur become a
delusion of grandeur, superiority, or supernatural powers!
To be effective, the social venture must be accessible to the target population. No matter how
effective a solution is in design, or how powerful a new technology is, if it does not reach the last
mile, it will not have a social impact. Oftentimes, this last mile can be quite literal, such as in the
case of health products or services that cannot be delivered to the patients who need them because
of inadequate roads. In other cases, bridging the gap between the intervention and the target
population requires changing the design, cost, and other features of the product or service to meet
the sociocultural and economic characteristics of the target population. This is also part of making
it acceptable to the end user, within the local context and culture.
Beyond social factors, a key determinant in bridging these multiple aspects of design, cost,
and delivery of the social product or service to the target population is the physical distribution
channels—how will we actually deliver this? We will go into more detail about all these factors in
the coming chapters and apply them to your own social venture.
What Are Some of the Basic Skills Needed

for Social Entrepreneurship?
Many of the skills needed to start a social venture are very similar to those needed in starting a
commercial enterprise. These include building the organizational structure, business planning,
accounting, marketing, project management, human resource management, communications,
Introduction ◾ 11
Social entrepreneurship is… Skills required…
Disruptive The Entrepreneurship Component:

Ambitious, scalable Innovation and Business Skills
Financially viable
Evidence based The Social Component:

Accessible to target population Social Service Skills
Effective in addressing root causes of the problem
Figure 1.4 Defining characteristics of social entrepreneurship

and corresponding interdisciplinary skills.
stakeholder analysis, and building external partnerships. In addition to these basic business skills,
social entrepreneurs must further be able to characterize the problem they are trying to solve by
collecting information on characteristics of the affected population, existing obstacles and infra-
structure, and past attempts to solve the problem and why they have failed. A process to co-create
the solution with the community then takes place to ensure that it is accessible, affordable, and
acceptable by the community. Social entrepreneurs also set measurable objectives to monitor and
evaluate the social impact they set out to create. Thus, the skill set required by a social entrepre-
neur includes skills from the worlds of both business and social services (Figure 1.4).
How to Use This Book

This book will guide you along the step-by-step process from characterizing your challenge to for-
mulating your solution to implementing, measuring, and scaling the solution. It assumes no prior
knowledge of social entrepreneurship and can be applied to various subject matter fields including
science, commerce, law, education, health, and others. The contents of this book are based on the
author’s practical experience in working with social entrepreneurs around the world, synthesizing
key tools, resources, and approaches to maximize the chance of success in producing the desired
social impact. It is a nuts and bolts how-to guide that helps readers emerge from their silos to
design and implement a solution.
This book is designed to function like a manual, to support a young social entrepreneur in
developing and implementing a social venture from A to Z. (The word young here refers to the
reader who is at the start of a new journey, regardless of your calendar age!) Exercises and learning
tools are built into each chapter, including example boxes, discussion questions, planning tem-
plates, and assignments. Case examples of social entrepreneurship will be presented for various
sectors including health, environment, energy, education, agriculture, and microfinance, repre-
senting various geographies and cultures from regions around the world, from both urban and
rural scenarios.
We will also hear from a host of social entrepreneurs and thought leaders in the field. Each
person will chime in with his or her own perspective and ways of doing things. The goal is to ham-
mer home the idea that there is not one correct way of doing things, no magical model that will
solve all the world’s problems. It is up to each one of us to find the model that works for us and
our challenge. The best we can hope to do is exchange success stories and lessons learned, to spread
our impact, and together collectively change the face of the social challenges we are confronted
with today.
Interview Box. Bill Drayton, Founder and CEO

of Ashoka Innovators for the Public
TC: The term social entrepreneurship is often traced back to

you. What do these words mean to you?
BD: An entrepreneur is someone who changes patterns in her
field. A social entrepreneur is one who is committee to
the good of all. This is a characteristic of the person, not
the sector. Even in education, some people are in it for the
money or for various reasons—trying to put a sector on it,
or a business model on it, is not the way to go. Struggling
with financial or subject matter structures is a losing
game—the world is changing, and categories are shifting.
TC: What about the term social impact. What do these words mean to you?
BD: There are three layers of impact. The first is direct service: teachers in classroom,
workers in factories, there are different measures of impact in service. This is where
social entrepreneurs create their prototypes. Then, the second level is pattern change.
Social entrepreneurs want to change society and the world—it’s more than just how
many people can you serve. Finally, the third level is mindset and framework change.
Changemakers offer a new way of thinking and doing things, so that others can then
apply it. That’s their impact—the ripple effect.
TC: What advice do you have for someone about to embark on a social entrepreneurship
journey?
BD: It’s more than just having an idea and then implementing. How will you change your
field? One aspect is your inner drive, something deep within you; you’re looking for
something you care about that you can change. Another aspect is how good you are at
the “how-to.” Are you thinking and iterating? Do you have an engineering (making
things) mindset? It’s an iterative process that goes on for years and years.
TC: You have been known to say that everyone is a changemaker. Do you think this can
be learned?
BD: Everyone must be a changemaker because the game is changing. The world so far has
been defined by repetition; that’s how we’ve been raised, learned to read and write,
trained for jobs. That will not do anymore. People reading this book have to master
being a changemaker and have to aspire to be a social entrepreneur. A world in which
everyone is a changemaker is a world where everyone is operating for the good of all—
you need special skills to do that. Being a changemaker means everyone is powerful.
Goodbye world defined by repetition—hello world defined by changemakers!
In the next chapter, you will be asked to pick a challenge of your choice and create a solution
for it in the subsequent chapters. This will allow you to apply the different learning tools and con-
cepts to developing your solution, building the skills you will need to implement it along the way.
Don’t panic if you have multiple challenges that you care about and want to address—Pick one to
use along your learning journey, and you can tackle the others next, when your solution-building
muscles are stronger. In choosing your topic, think about what you will most likely be able to
realistically implement in the future. This will depend upon your knowledge base and experience,
Introduction ◾ 13
location, and the resources available to you, including your networks. Because the nature of this
work is already ambitious by definition, it is wise to start by keeping it simple, anticipating all the
challenges and complications that will then unfold.
Conversely, if you do not have a topic of interest, don’t panic! Spend some time reading about the
social challenges that affect your community and learn more about their root causes. You will find
something that speaks to you and that you feel you may be able to contribute toward solving. Get out
there and talk to people! Social entrepreneurship is not something that takes place in a living room,
classroom, conference hall, or in any ivory tower setting. You will need to roll up your sleeves and get
your hands dirty! This book will equip you with the frameworks and tools necessary to dig deeper.
Most importantly, it is critical to keep in mind that social entrepreneurship is not linear. You
can, and will, go back and start over, reassess, reconsider, and redevelop your solution and even
your formulation of the challenge you are tackling. It is a dynamic process, so don’t be afraid to
take the first step; you can always come back and go in another direction.
The chapters in this book have been arranged in an order that is easy to follow and will facili-
tate the development of your ideas and the collection of evidence to build your venture. However,
it is important to understand that this is not always the order in which social entrepreneurship
takes place. Most of the time, there is no order! So keep in mind that while you go through the
exercises prescribed in this book, you’ll need to open your mind to the idea that solutions are born
in many different ways.
Learning Tools
Among the tools and templates you will find in this book are some of the planning methods used in
the fields described previously, carrying a combination of business and innovation and social service
methodologies (Figure 1.5). In Chapter 2, one of the tools we’ll share will be visual diagrams that
you can use to help wrap your head around all the information you’ll be digging up about your
challenge. In Chapter 3, we’ll talk about tools you can use during the co-creation process, such
as a stakeholder analysis and asset mapping. In Chapter 4, you’ll learn about user-driven design,
rapid prototyping, and a template to help develop your theory of change. In Chapter 5, you will
use a business canvas to assess end users, partners, channels, and other important components of
Cases: in-depth examples Toolbox: tools and

from various sectors • Causal graphs
templates to help you
• Inverted Ishikawa
organize and develop
information and ideas • Stakeholder analysis
• Asset mapping
• Theory of change
• Value chain canvas
• Logframe
• SWOT • PESTEL
Illustrations: Breakout boxes:
• Resource planner
Diagrams, flowcharts Summary boxes, profiles of
• Messaging matrix
social ventures, and
entrepreneurs
Figure 1.5 The different kinds of learning tools in this book.

building your supply chain. In Chapter 6, you will create a process map to outline the nuts and
bolts of the operations you’ll need to run to deliver your solution. In Chapter 7, you will use the
logframe template to build backward from the social outcome you’re working to create, starting
with your ultimate goal based on the root causes of the problem you are trying to solve, and speci-
fying your objectives, the measurable outputs you will produce to meet those objectives, and the
activities and costs of producing those outputs. In Chapter 8, you will conduct a SWOT analysis
and PESTEL analysis to analyze key threats and opportunities, and in Chapter 9 you will put it all
together in a pitch summarizing your business plan. In Chapter 10, you will learn about a resource
planning tool to help you navigate the various sources of funds and other information available to
you; and in Chapter 11 you’ll learn about different ways to institutionalize your venture. In Chapter
12, we will introduce a marketing matrix to help develop your messaging. Then we’ll take a step
back in the final chapter, Chapter 13, to assess the big picture and where we want to go with all this.
All the concepts and tools in this book were developed over long periods by multiple individu-
als and organizations in multiple sectors; the author does not claim to have invented any of them,
and most can be found online in some publicly available format. References for these resources
are cited throughout. This book is simply a repository and reference book for you to use as a guide
to build your social entrepreneurship practice. You are strongly encouraged to be resourceful and
conduct your own external research to identify different formats and methodologies that are more
suited to your social venture as you develop it.
Along the way, you will also be reading the stories of social entrepreneurs who have taken the same
steps you are about to take. They will share their stories of trial and error with you, what worked and
what didn’t work for them. These stories will give you ideas and encouragement and point out what to
look for in formulating your problem and solution, building your organization and your team.
In summary, the learning tools we will be using in the coming chapters include the following:
◾◾ A step-by-step guide for building your venture

◾◾ Planning tools and templates for key steps along the way
◾◾ Examples of existing social ventures in various sectors
◾◾ Interviews with social entrepreneurs
◾◾ Assignments for each chapter, which you will apply to your own social venture
Modules
Let’s take a quick overview of the roadmap ahead. Steps to implement your own intervention can be
broken down into learning modules, and over the coming chapters, we will go through these steps
together one at a time. As you implement your social venture, you may need to revisit some of these
steps multiple times. This is because social entrepreneurship is an iterative and dynamic process. It
is almost impossible to complete the journey in a linear fashion, as each step along the way, you will
collect new information and feedback that will continuously shape and reshape the outcome.
1. Define your challenge (Chapter 2)

– What social challenge are you aiming to solve? It is recommended to start with the chal-
lenge and build the solution around it, rather than start with a solution looking for a
problem (or as the saying goes, “a hammer looking for a nail”).
– What data and statistics are available about the challenge? What are its root causes?
– Who is affected by it? Characteristics of the affected population include the following:
Introduction ◾ 15
• Sociodemographic characteristics: age, gender, income, education, occupation, and

others
• Geographic characteristics: where are they located, what is the physical infrastruc-
ture like, are there physical barriers to delivering a solution, are there environmental
factors causing or affected by this problem
• Cultural characteristics: traditions or norms that affect the way people think or act
related to this problem, and how they would react to potential solutions
• Other social characteristics: is the population isolated, are there social networks
in place, what do they look like, is the population homogenous or is there a large
amount of diversity, what other “co-challenges” are they facing
– What has been tried before, why didn’t it work; i.e., why are we still facing this problem
today?
2. Co-creating and designing the solution (Chapters 3 and 4)
– You’ll need to work together with those affected most by this challenge to figure out
what your value proposition to them can be. Then you build your solution around that.
• What are the needs and preferences of the community? What opportunities are
there to build a solution with available resources? What do we need to look out for?
• What are the resources available based on the physical and social setting?
• Who are the stakeholders that must be brought together for any solution that is
developed to actually work?
• What are the key considerations for delivering this product or service? What are the
main barriers that need to be addressed in order to reach the last mile?
– What might this solution look like? How will it work? What characteristics does it need
to have?
– How is your solution tied back to the challenge you are trying to change? What is your
theory of change?
– How can you develop new ideas and test them?
– Who do you need to recruit to help you?
3. Delivering your solution (Chapters 5 and 6)
– How can you build systems to deliver your solution effectively?
– How will you reach your target audience? What is your marketing and distribution plan?
– What will be the nuts and bolts of your operation?
– Beyond the founders, what human resources are needed to build the organization?
4. Measuring your social impact (Chapter 7)
– Measuring social impact is not something that happens at the end, it’s one of the first
things you think about because it informs your subsequent trajectory.
– What does success look like? Define success and work backward from it to define your
path to get there!
– How will you know if you are making a difference? Set performance indicators, both in
terms of processes and outcomes.
5. Ensuring financial viability (Chapter 8)
– How will this all be financially viable? What is your business model?
– What are the main costs and revenues? What are your financial projections, what
resources will you need to invest, and how/when will you recoup them?
– What are the strengths and weaknesses of your proposed model, what external oppor-
tunities can you leverage; what are the external threats to your success and how can you
mitigate your risks?
6. Funding and structuring your venture (Chapters 9 through 11)

– What resources do you need to make all this happen? We’ll talk about both financial
and other resources.
– What funding sources are available to you?
– What are the different funding vehicles and social investment approaches that you need
to understand and navigate?
– How will you roll your venture? Will it be within an existing institution or do you need
to start a new organization?
– If you do need to create a new organization, what are the various registration options
available in different parts of the world?
– What are the components of a healthy organization; what are the different systems and
processes you need to put into place to grow sustainably?
7. Communicating and creating partnerships for scale (Chapters 12 and 13)
– Who are the various stakeholders you need to exchange information with? These include
your end user, your team, your partners, and others.
– What pieces of information do you need to exchange with each stakeholder, and how
will you get that information across?
– Once you are up and running, you’ll need a growth plan to help you work your way
toward the definition of success you set for yourself from the start.
– This definition might include reaching the largest number of people possible, or it might
have targeted a very difficult to reach population that requires a very different trajectory
from the general population.
– As you grow, what needs to change? Starting your venture requires very different
resources, skills, approaches, and strategies than growing.
– There are numerous ways your social venture can grow and expand its reach, and many
of these involve reaching outside of your own organization to maximize the total impact
you can work with others to help create.
Learning Objectives
As you can tell from the nature of these modules, by the time you are finished with this book, you
will be looking at the world in a whole new way. At many points along the journey, you might
feel intimidated, overwhelmed, and tempted to toss everything into the wind. This is normal! It’s
a sign that you’re immersing yourself and engaging in the learning process. Remember that each
and every social entrepreneur has felt this way at multiple points along the road (or more like
multiple points in the same day!). If we are going to let the scale, nature, and complexity of the
challenges facing us today daunt us, then we will never be able to change them. Just take it one
step at a time, and you will see for yourself, anything is possible.
As you progress through the sequential stages of the textbook, look at all the things you will
learn how to do!
Upon completion you will be able to
◾◾ Characterize a social challenge of your choice in an evidence-based manner using available

data and statistics, describing root causes, barriers, and affected populations
◾◾ Investigate localized settings, nuances, cochallenges, best practices in facing this challenge,
and opportunities to change the status quo
Introduction ◾ 17
◾◾ Develop a solution centered on the target population and taking into account existing infra-
structure and networks, designed to maximize access and minimize costs
◾◾ Test the assumptions linking the solution to the social challenge and specify success metrics
to indicate whether the intended changes are being made
◾◾ Build a business model to sustain the delivery of the solution, exploring multiple financing
mechanisms and potential revenue streams in line with the overall mission
◾◾ Pitch and present the idea, exchanging information with the end users, funders, team, and
other stakeholders
◾◾ Develop the organizational frameworks and team members to deliver the solution in a sus-
tainable manner
◾◾ Develop a strategy to engage stakeholders and create partnerships to ensure success
Summary and Next Steps

Congratulations! You are about to embark on a life-changing journey. That part of you that has
always longed to tackle the challenges facing our world today is about to become very, very alive.
And have no doubt—we are aiming to create a monster! With the tools and concepts enclosed
in this book, you will build the skills and mindset required to tackle the social challenge of your
choice. Keep checking back in along the way, revisiting each step before, and ensuring that your
solution cumulatively takes into account all the pieces of knowledge you will gather along the way
(see Summary box).
Exercise: Your Assignment for This Chapter

The work starts now! Write down your answers to the thought questions below, using only one
sentence per question. This is among the most needed skills you will need as a social entrepreneur!
Spend a lot of time thinking and researching and then find a way to summarize your answers in a
clear and concise manner. You might write pages and pages of notes before you’re able to formulate
your one sentence. This is good—hold on to these for later, you will need them.
Thought questions:
1. Thinking back to the information, people, and experiences you have been exposed to up
until this moment in your life, what would you say are among the top social challenges
you have spent time thinking about to date? (One bullet point or sentence per issue. Try to
restrict yourself to the 3–5 social challenges you have interfaced with the most.)
2. For each challenge you listed, in one sentence per question please answer the following questions:
a. What opportunities have you had to gain insight into this challenge over the course of
your lifetime?
b. Has your experience been personal or professional, firsthand or through reading/studies
(or a combination)?
3. Think back to a failed attempt to tackle one of the challenges you’ve listed above. It could
have been by you or someone else. Describe what was attempted. Why didn’t it work? (2 sen-
tences total.)
4. Each one of us holds one or more positions in society, whether as a student, professional, parent,
or community member. In your current role(s), what opportunities and resources are available
to you that you can leverage to contribute to tackling one of the social challenges above? (These
could include people, knowledge, events, physical or political or financial resources, or other.)
5. By the time you finish this book, what new knowledge, awareness or skills do you hope to
gain more of? Are there any milestones or targets you’d like to accomplish?
CHAPTER SUMMARY
◾◾ Social entrepreneurship is the process by which effective, innovative, and sustainable
solutions are pioneered to meet social and environmental challenges.
◾◾ This is implemented through a social venture, which can take many shapes and forms,
designed to deliver a solution addressing a social challenge in a financially viable way.
◾◾ This book approaches social entrepreneurship in the context of sustainable develop-
ment: the growth of society in multiple dimensions, including economic, social, and
environmental.
◾◾ What distinguishes social entrepreneurship from other forms of entrepreneurship is
that it serves marginalized populations, often responding to market failures. Financial
viability is a means to an end, not an end in and of itself.
◾◾ Skills needed by a social entrepreneur combine business, management, and innovation
skills alongside research, social service, and communications skills.
◾◾ This book provides tools, templates, and exercises to help build these skills. It also
includes examples of social ventures across sectors, case studies, and interviews with
social entrepreneurs.
◾◾ As we proceed through the chapters, you will develop your own social venture, start-
ing with a challenge of your choice and building an evidence-based solution tackling
its root causes. Now, let’s begin!
Social Ventures Mentioned in This Chapter
Company profile: Grameen Bank, www.grameen-info.org.

Founded in 1976 as an experimental project, in Jobra village of Chittagong district of
Bangladesh. Later established as a specialized bank in 1983.
Product/service: Grameen Bank provides the impoverished in rural Bangladesh access to
credit and other financial services without the need for collateral.
Goal: Alleviate poverty for the poorest of the poor by targeting and providing financial
services to women in rural Bangladesh.
How it works: Grameen Bank has reversed conventional banking practices by removing the
need for collateral and building a system built on accountability, mutual trust, creativity, and
participation. Low income women in a community form groups of five, and several groups are
federated into a “center” which meets weekly with a Grameen staff member. Loan proposals,
collection of savings, and loan installments take place at the center meetings. It is the group and
center that decide on whether to approve a new loan by a group member. The bank operates
under the assumption that if the poor are given access to credit, they will identify and create via-
ble income-generating businesses such as weaving, manufacturing pottery, raising poultry and
livestock, cultivating vegetables and groups, running grocery shops, and sewing, to name a few.
◾ 19
Company Profile: Kiva, www.kiva.org.

Founded in 2005, San Francisco, California, USA.
Product/service: Kiva works with microfinance institutions in five continents to provide
loans to people who do not have access to traditional banks. The company relies on over 450
volunteers worldwide.
Goal: To connect people by leveraging the Internet and a worldwide network of microfi-
nance institutions, to provide microloans and alleviate poverty.
How it works: Created by executives from Paypal, TiVo, and other leading tech companies.
Kiva allows anyone in the world to lend money online. Lenders pick a region or country
and sift through the stories of those looking for funds to grow a business, go to school,
implement clean energy, and more. Once a loan is given, the lender receives updates as the
borrower works toward his or her goals and repays the loan. Lenders get back every cent—
meaning that one $25 loan can be used to help alleviate poverty over and over again! Kiva
proudly boasts a 98.75% lender repayment rate.
Company Profile: City Year, www.cityyear.org.

Founded in 1988, Boston, Massachusetts, USA.
Product/service: Education-focused national service organization dedicated to helping stu-
dents and schools succeed.
Goal: To help students stay in school and on track to graduate from high school, ready for
college and career success.
How it works: Diverse teams of highly trained City Year AmeriCorps members, who have
been recruited through a highly selective recruitment process, provide high-impact student,
classroom, and school-wide support. Using the holistic City Year “Whole School Whole
Child” model, City Year AmeriCorps members provide individualized educational and
emotional support to at-risk students and also work to establish a positive learning envi-
ronment. A recent third-party study shows that schools that partner with City Year were
2–3 times more likely to realize math and English gains.
Chapter 2
Characterizing Your Challenge
PART ONE: INTRODUCTION

The very beginning of your journey starts with identifying and characterizing the challenge you
are tackling. Before you even start thinking about developing the solution, it is important that you
invest enough time and resources in understanding the challenge to the extent possible.
You are not alone in wanting to tackle all the challenges under the sun—we’ve all been there!
But if you want to get anything done, you need to focus. The best way to get results is to proceed
one step at a time.
This chapter will help you focus on one challenge to work on throughout the course of this
book, to build your solution step by step. First, we’ll start by characterizing the nature of what it
is you are trying to change.
The best way to fail is to not spend enough time understanding the nature of the issue you are
tackling. What other social entrepreneurs have learned before you is that this is something that
changes with context. As we discussed in the first chapter, there are no one-size-fits-all solutions.
And do you know why? The answer is quite simple. It’s because there are no one-size-fits-all prob-
lems! While the core needs of the human race are shared by us all, the realities of each person’s life
depend on the context she or he lives in.
Most social challenges we will talk about in this book do not affect everyone equally.
In this book, we will approach this by first collecting information that is already out there
on the topic of your choice and then zooming in on the context in which you’ll be working and
collecting your own information. The next chapter focuses on the in-context immersion. In this
chapter, we’ll focus on how to frame your investigation, where to go about looking for informa-
tion, and how to think about what it is exactly that you’re trying to do when you first set out to
characterize your challenge.
21
Because we are applying the social entrepreneurship approach, we start with the social part
first: the people.
Let’s start with some definitions. By social challenge, we mean anything about the world that
you want to change that affects others. Most social challenges we will talk about in this book do
not affect everyone equally. The people who are most affected are those who have already been
disadvantaged by facing multiple challenges. For example, climate change affects us all, but it
affects people living in poverty in remote rural areas more than most others. Air pollution and
water pollution affect us all, but they affect people living in urban slums more harshly than most
of us. Because we’re applying the social entrepreneurship approach, we start with the social part
first: the people. We try to understand who is affected by this issue, what the causes are, how it is
manifested in their lives, and what they think should be done about it. You might already have an
idea or a solution right now that you are already thinking about implementing. And you might
stick with that idea throughout the course of the book! But you also might change your solution
once you start your investigation. This happens very, very often in the life of a social entrepreneur.
We go through many iterations before we find the right fit.
Characterizing a social challenge consists of two points of view: seeing the problem and see-
ing the opportunity.
Two Important Viewpoints

Characterizing a social challenge consists of two points of view: seeing the problem and seeing the
opportunity. The problem is the issue you would like to change. The opportunity is the part that
you think you can change about it. Sometimes, the opportunity is staring you in the face! Other
times, you have to work hard for it. The reason it’s important to understand these two aspects is
that it’s not uncommon for a social entrepreneur to start by seeing an opportunity first. You might
see an untapped resource, and think about ways to mobilize that resource to solve a social prob-
lem. An example of an untapped resource that could be turned into an opportunity is a human
resource, such as young people who could volunteer to improve their environment or society; or
a group of women working in the same village who could be brought together to form a social
fund. But even when you are working to meet an opportunity such as an untapped resource, you
need to trace back the social impact you want to create, to the social challenge you are address-
ing. For the previous examples, this would mean understanding how these young people could
be mobilized to prevent environmental deterioration and how household poverty in this village
could be solved through a social fund led by these women. Understanding why the problem exists
and the channels through which it manifests itself will allow you to more strongly build your
solution around the problem. The reason it’s important to start with the problem—or trace back
the opportunity to the problem—is that there is something about the world that you are hoping
to change. Understanding what that is and putting it at the heart and core of your social venture
will help ensure that all the work you are putting into this will in fact create the impact you are
trying to achieve.
Characterizing Your Challenge ◾ 23
Sometimes, the opportunity is staring you in the face! Other times, you have to work hard
for it.
Seeing the Opportunities

As a social entrepreneur, feel free to unleash the visionary in you! Acknowledging the importance
of having an in-depth understanding of why things are the way they are today does not mean put-
ting aside the ability to imagine how they could be different. If you have a vision of how things
could be better, that is a good place to start too! The main recommendation here is that you first
ask yourself why things aren’t like that already and what the challenges are that people face today,
and then you can be better equipped to make things into what you think they should be.
Do you envision a landscape where everyone has access to information through Internet con-
nectivity, so that they’ll know what’s going on in the world around them? You can make this
change, anything is possible, just make sure to equip yourself with the knowledge of how things
came to be the way they are today and who the players involved are. Tackling a great challenge is
best done when you have assessed the landscape, the obstacles, the opportunities, and the resources
available to you. Part of making your vision come true is to understand why things are like this
today, and this could be one of the first steps to unlocking the path to a different tomorrow.
Social and environmental outcomes are multifaceted and there are no silver bullets.
Understanding the Challenges

It goes without saying that most social and environmental challenges are multidimensional.
Environmental deterioration, poverty, lack of social safety nets, and unemployment are all due
to multiple causal pathways that cannot all be solved with the same intervention. Many humani-
tarian organizations, foundations, private investors, and other funders often search for a “silver
bullet” that will solve a problem with one solution. If only it were that simple! Social and envi-
ronmental outcomes are multifaceted and there are no silver bullets. Social entrepreneurs working
together to tackle various causal pathways will have a transformative cumulative impact if they
can identify the exact challenge they are tackling, the pathways they are zeroing in on to tackle it,
and the impact they will demonstrate as a result. We will talk more about charting your pathway
and impact in future chapters; for now, let’s focus on the first and perhaps the most important step:
characterizing the challenge.
Scope of This Chapter

Providing information on the multitude of social and environmental challenges we face today
is beyond the scope of this chapter. The focus of this chapter is to underscore the importance of
building your solution around the challenge you are setting out to change. You will learn about
what it means to characterize a challenge, what pieces of information you should be looking for,
and where you might be able to find them. Different levels of evidence, data, and other forms of
information will be described. We will also talk about the various dimensions you should look for
in order to truly characterize a challenge from the inside out and get a 360-degree, 3D+ picture.
Here, the plus sign refers to the notion that most problems have many more than three dimensions!
Regardless of the source of data, you should be looking for the different faces of the challenge you
are tackling. These include its geographic distribution (where it is) and its sociodemographic dis-
tribution (who it affects). It also includes the challenge’s scope in terms of how widespread it is and
how deep its impact is. Trend over time is another factor to consider, as are “co-challenges”—other
challenges that are closely interlinked with the one you are addressing.
Data Is Power
In commercial entrepreneurship, it is commonly said that fewer than 1 in 10 start-ups succeed.
In social entrepreneurship, the jury is still out, as experts continue to debate on whether there is
a higher or lower rate of success. On the one hand, the basic social problems we face today are
multifactorial and extremely difficult to solve. This is why they still exist! On the other hand,
social entrepreneurs are armed with a weapon that can help inform their likelihood of success if
applied properly. That weapon is data! A wealth of information and research has been collected
and conducted on social problems facing various societies and communities to date. Researchers
from government agencies, universities, think tanks, private consultancy firms, and NGOs have
spent millions of dollars and person-years* characterizing the root causes, affected populations,
and factors influencing the world’s leading social problems. This is why it is so important to invest
the time getting to know your problem inside out before you start attempting to solve it.
The basic social problems we face today are multifactorial and extremely difficult to solve.
This is why they still exist!
Why is it important to spend so much time characterizing the challenge? It may seem like a
waste of time to many readers at first, who are eager to take action. We know the problem exists,
you might be thinking—studying it to death will not help anyone; we need to start solving it! This
is very true, and the textbook you are reading embodies the essence of taking action to solve social
problems. However, it cannot be emphasized enough that before diving in to take action, time
must be invested in ensuring that the social entrepreneur has all the information at hand. Data
is power. The more you know about a situation, the higher your likelihood of success in making
changes which result in tangible improvements to the affected population. It is absolutely not an
option to start your social venture without taking the time to review the available information,
synthesize it, and think about what changes are feasible to make and how.
The more you know about a situation, the higher your likelihood of success in making
changes which result in tangible improvements to the affected population.
Where does one start? Before you begin, it is important to understand the nature of the challenge
and its underlying sources. “Know your enemies.” If you are setting out to eradicate a certain disease
* A combination of time spent working on something multiplied by the number of people working on it.
in a certain community, find out what root causes are propagating it—you might end up tackling
the challenge of getting clean water in that community instead! If your goal is to ensure that every
child in this community is enrolled in primary school, you’ll need to develop a deep understanding
of why and how their parents make decisions, alongside understanding the general infrastructural
challenges, like where the schools are, what the opportunity costs are, and what the student experi-
ence is like. Or your challenge could be reducing the carbon footprint of industrial complexes in an
urban setting. Here, you’ll need to understand what room you have to work with within the context
of existing government policies incentivizing industries—or whether you can help change these
policies—and what benefits you can offer to industries if they reduce their carbon footprints. What
drives their behavior? If you don’t have a solid grasp on these issues, then how can you change them?
Collecting information on a social problem can seem very time-consuming and overwhelming
to a beginner, and for good reason. Do not rush this step. Take the time to familiarize yourself
with key statistics and data sources, talk to people, and keep a record of each step you take and
each resource and piece of information you find.
Approaching Your Topic

Think back to a previous time when you have explained a challenge to a friend or colleague. It could
be a work challenge, personal challenge, homework challenge, or a plot in a book or television show.
You probably did a good job of conveying the characters involved, the sequence of events, the physi-
cal and social setting, and the influence of various factors (relationships between characters, back
story, twists in the plot) on the narrative. The person listening to you probably became extremely
engaged, wanting to know more, and wanting to figure out how it’s all going to end.
This is what you need to do when formulating your challenge. You need to have an in-depth
understanding of why it exists, who the characters involved are, what the knowns versus unknowns
are, how the surrounding environment (both physical and social) influences the challenge, what
the back story is, and what the time trends are, i.e., where this is all going.
Most importantly, you need to be able to communicate this effectively. Thus, characterizing
the challenge involves both (a) understanding the challenge for your own purposes and (b) being
able to relay its importance for others to get involved. You will need others if you’re going to
effectively tackle this challenge. In the next chapters, we will talk about going out into the field to
meet with the experts—those facing the challenge—and begin to investigate potential solutions
together. In this chapter, we will talk about wrapping your head around the challenge, before you
even take one step.
Resources available to you include Internet searches, peer-reviewed journal articles, academic
dissertations, institutional reports, interviews with experts, and observation in the field (which we
will talk more about in the next chapter). For now, start the old-fashioned way: by doing some online
research. Start with a systematic online search (either of the general cyberspace and/or of a journal
database) by identifying keywords to search for and gradually narrowing down your criteria. Most
importantly, keep track of your research methods and your results. You can synthesize and analyze
these later. In the coming steps, you will build on your results by speaking with the people directly
involved and by immersing yourself to experience the challenge firsthand if you haven’t already.
You will need others if you’re going to effectively tackle this challenge.
Before you dive into your research, put your investigator lenses on. Look at everything with a
fresh set of eyes, and don’t take anything at face value. Two important things to keep in mind at
all times are: question all assumptions, and think like a child!
Keeping asking “why?” until you cannot ask it anymore.
Think Like a Child

The investigation stage can be fun! Just like a good old-fashioned detective, keep asking yourself
“why?” until you cannot ask it any more. Dig out that investigative three-year-old in you that kept
asking your parents “but why?” over and over again, regardless of the answers they gave you.
You may never understand in black-and-white terms everything there is to know about this
challenge, but you will have at your disposal the facts that have so far been collected by humankind
on it. The hard part is deciding what to do about the specific situation you are working in, and we
will focus on that in the coming chapters. For now, focus on reading about, listening to, watching,
and observing the previous work of others leading up to this moment. What have they found out
that you can use in the future to build your solution? You won’t be able to solve everything under
the sun, but if you know the various pieces of information linked to your challenge, and if you are
working with a community facing that challenge, then you will be able to put together the differ-
ent pieces and connect the positive factors in a way that overcomes the negative factors.
Question All Assumptions

Assume nothing. This is another big part of asking “but why?” Just because things are run a certain
way today doesn’t have to mean that this is how they necessarily have to be run (remember the star-
fish story used by City Year)! Muhammad Yunus was an economics professor who was not trained in
banking. Bankers had a good understanding of the minimum requirements to open an account and
of why the banking institutions served only certain people in certain situations. Mohammad Yunus
asked, “but why?” Others assumed that if you are poor, you will not be able to pay back a loan. Yunus
and the Grameen Bank showed that in 98% of cases, microloans are in fact repaid (remember the
company profile from Chapter 1)! He questioned the assumption that only wage-earning middle-
class people could open a bank account. He believed that even people living in poverty should have
access to financial services. Because he questioned these assumptions, he was able to break the mold.
PART TWO: A FRAMEWORK FOR CHARACTERIZING

YOUR CHALLENGE
What Exactly Does This Mean?
Is it just another buzzword or catch phrase to say “start by characterizing the challenge”? What
exactly does this mean? Characterizing the challenge means knowing exactly what you are facing.
Narrowing it down to a manageable scope. Becoming an expert in the topic you are working on:
both a subject matter expert and a field expert, the former of which we will tackle in this chap-
ter and the latter of which we will talk about more in the next chapter on co-creating with the
community. Right now, in order to characterize the challenge, you need to be able to answer the
following questions:
◾◾ What? What is the challenge you are narrowing in on? What is its nature and characteristics?
What consequences does it have on people?
◾◾ Who? Who are the affected populations? What are their characteristics? Does it affect some
more than others?
◾◾ Where? What is the distribution of the challenge, its causes, and affected populations?
◾◾ Why? What are the root causes?
◾◾ How? What are the pathways by which these causes affect these populations?
◾◾ Dimensions:
– Magnitude versus distribution (depth versus breadth) of the challenge
– Sources, types, and quality of the data you are using to understand the challenge
◾◾ Prior attempts to conquer this challenge:
– What has been tried already, what has worked and what hasn’t—And why?
What Are You Trying to Change?

Let’s go through an exercise that will help you get started in characterizing your challenge. Start by
writing down what it is you are trying to change. You should be able to state this in one sentence.
This is an exercise that you are doing for yourself, so don’t get stuck on the wording; you will have
plenty of opportunity to circle back and edit, change, and develop it before you move on. But just
to get started: write down your challenge sentence. What is it all about? Describe in one sentence
the challenge and how it affects people.
Who Is Affected?
Next, write down who is affected by this challenge. Try to think of the different groups of people.
Does it affect certain ages more than others? For example, some social challenges affect vulnerable
populations, like the very young and the very old, the most. Air pollution is one such example: it
affects the heart and lungs of infants and the elderly more than the average adult. Does it affect
certain genders more than others? For example, some social challenges affect women more than
men, or vice versa. Lack of access to water is one such example: girls and women in remote rural
settings around the world spend hours each day walking to the nearest water source, collecting
water, and walking back. In many cases, this has a detrimental effect on girls’ ability to attend
school. Age and gender are examples of what we call “sociodemographic indicators.” These are
descriptive data that indicate population characteristics. Other sociodemographic indicators are
income level and occupation: many social challenges disproportionately affect those with low
incomes or those with certain occupations. One such example is climate change, which dispropor-
tionately affects farmers and food producers.
Where Are These People?

In addition to the sociodemographic distribution, you need to define the geographic distribution.
Where is this problem observed? How widespread is it? Does it affect different people in different
places, in different ways? Answering these questions will help you to think about where you might
have the opportunity to change it. Don’t be afraid to dig deep. Oftentimes, data are available only
at the aggregate level. This means that you might easily find global averages, regional averages, or
country averages. But there is so much variability at the local level, you need to look beyond the
surface.
Another tricky aspect you need to think about in terms of geographic distribution is, are the
causes and the symptoms observed in the same places? Knowing that there are multiple causes for
each problem, it might help to ask the question: which causes are localized, and which stem from
far away?
Why Has This Challenge Arisen, and Why Has It Persisted?

This brings us to the root causes. Understanding the root causes is the number 1 most important
part of this journey. This is not to say that you will always be able to tackle them at the roots. But
keep digging until you find the roots, and then you can step back and ask yourself how deep down
your solution can go. Most social entrepreneurs would agree that if they have the opportunity to
tackle a challenge at its root, they would go for it. If it is not feasible, then they would at least go
as far down the causal pathways as possible, in order to maximize the resulting impact.
Keep digging until you find the roots, and then you can step back and ask yourself how deep
down your solution can go.
How Do These Root Causes Affect the Challenge and Its Outcomes?
Don’t be satisfied with just listing the root causes without understanding as much as you can the
mechanisms by which these causes result in the outcomes you are looking to change. Tracing
the pathway of each root cause to its associated outcome is one way to do this. You might end up
with a lot more information than you signed up for, but this is okay! Remember our mantra, data
is power. Further in the chapter, we will talk about some ways to organize this information in a
way that helps you step back and analyze the multiple causes and pathways, so that you can start
thinking about which one(s) you will tackle and how. For now, putting on your investigator lenses
and trying to explore multiple pathways leading to the same outcome will help you identify the
different opportunities you have to change that outcome.
Dimensions of the Social Challenge

Try to think in as many dimensions as you can. This might sound abstract to you, but think about
a circle you might see from far away. If you get closer and try seeing the circle from different points
of view, you might find out it’s actually a sphere. That changes the nature of the object entirely!
Same goes for anything in life. When understanding a social challenge, it’s important to think
about its different dimensions. The depth of impact is one example. Is this a problem that’s faced by
many people, affecting different people in different ways? Is there a small number of people who
are strongly affected, versus a large number of people who are impacted to a lesser degree? The
spread of the challenge versus the depth is one important dimension for you to think about when
getting to know your challenge.
Think about a circle you might see from far away. If you get closer and try seeing the circle
from different points of view, you might find out it’s actually a sphere.
Examining trends over time is another way to investigate your challenge more deeply rather
than taking it at face value. Is this problem decreasing, increasing, or staying the same? Are the
trends different in various parts of the world, or in different populations? What is causing these
changes and variations?
Uniformity versus variability is yet another way to look at it. Is your challenge manifested in
more or less the same way everywhere, or is it highly variable? This is critical to designing your
solution and to scaling it: understanding to what extent the challenge differs in various places and
among various peoples, and what factors influence this variability.
Dimensions of Data
It is also important for you to think about the characteristics of the data you are using to build
your knowledge about this social challenge. What are the sources of information? Is there consis-
tency in your results?
Different types of research studies result in different types of data. One type is observational
data. Observational studies can provide a snapshot of the situation, or they can track it over time.
The data can be collected prospectively, such as by signing up a group of people to participate in a
study. Or they can be collected retrospectively, such as by looking into existing archives like hos-
pital records, government census data, etc. Observational studies attempt to draw links between
different factors.
For example, they may observe that in countries with certain policies, girls get educated more.
They may also observe that in these same countries, maternal child health outcomes are more posi-
tive. Does this mean that education is the root cause of positive health outcomes? We can only be
certain in cases where individual women were tracked for both these pieces of information, and
other factors in their life that could also influence these results were also accounted for. In this
example, it turns out that yes, it is indeed a root cause.
Ecological data are information we have at the large-scale level, such as country statistics. It is
more difficult to reliably infer relationships between different factors from ecological data because
there are so many other different factors that could be responsible for these results. So be careful when
making your own inferences. Read about the work of others who have been studying this field for
years and decades and immerse yourself in the scientific debate of the leading researchers on the topic.
Another type of study is a randomized control trial (RCT). This is used by researchers when
they want to control the setting in which the social outcome in question is observed, to be sure
that the factors they are studying are indeed the cause of this outcome. This results in experimental
data rather than observational data. If we have enough people in the experiment to ensure that the
results are not likely to be a coincidence or an exception in this small sample, and if the experiment
follows proper protocol to make sure the results are not biased, an RCT can be a powerful study
design in understanding root causes of social challenges.
Why is it important for you to understand the different types of data and the type of study
they came from? It’s important because you need to be aware of the different implications of vari-
ous study designs, and the different dimensions of data, to assess whether and how the results can
inform the setting you’re working in.
Immerse yourself in the scientific debate of the leading researchers on the topic.
Causality is an important concept to understand because if two factors are related, that doesn’t
mean one causes the other. Understanding the directionality of relationships is important in iden-
tifying opportunities. If two factors are related, but the first doesn’t necessarily cause the second,
then changing the first will not necessarily change the second! The second might affect the first
instead—the arrow might go the other way! Or, they might have a common root cause, which
means you have to keep digging.
Generalizability is another dimension you should be aware of. If a study is conducted in one
town or one country, are the results generalizable to any setting? Or could they potentially be
attributed to the unique qualities of that setting?
Different Types of Data

Different types of data also include quantitative versus qualitative, primary versus secondary, and
raw versus aggregate. Quantitative data refers to numbers, such as statistics. Quantitative informa-
tion can tell you how many people are affected, what proportion of the population this is, and
what their outcomes are, such as health or education test results for example. Many of the above
study types result in quantitative data. Qualitative information is descriptive and results from
interviews, surveys, and other field-based methods. It can tell you how people feel about a certain
challenge and how it affects their lives and provides examples of personal experiences with this
challenge.
Primary data are that which you collect yourself, while secondary data are that which have been
reported by someone else. At this stage, you will most likely be collecting secondary data. Last but
not least, all of these types of data, with the exception of data from the ecological studies described
previously, can be either raw or aggregate. Raw data means the original information you initially
collected, such as what this person said or measured or earned. Aggregate data means that raw data
have been grouped and summarized over many people; for example, percentages, averages, sums,
and other statistics are aggregate data.
The type of information you will be accessing at first will largely be from sources that have
already compiled, synthesized, and analyzed multiple studies. This will make it easier for you to
get a general introduction to the topic of your choice before you dive deeper. But it’s still important
for you to keep in mind all these different dimensions of a social challenge and dimensions of the
data used to describe it so that you can decide for yourself what the knowns and unknowns are.
Prior Attempts to Conquer the Challenge

Last but not least, what has been tried before? What has worked, and what hasn’t? So many pro-
spective social entrepreneurs have jumped headfirst into a challenge without doing their home-
work. Don’t reinvent the wheel! There are individuals and organizations worldwide that have
dedicated their lives to figuring out what works and what doesn’t, so at least start with this knowl-
edge base as your foundation.
Again, as in all the previous points, go with the data. Following your intuition is not
enough if your intuition is not well informed with evidence. Be objective, open up your mind
to the possibilities, and start from fresh like a true detective would. Don’t forget, people’s per-
ceptions may differ from the reality. And many get caught up in trends or hot topics. You need
to spend a lot of time thinking about which challenge you want to address, learn everything
you can about the multiple dimensions of that challenge, and investigate what others have tried
before you. By taking these steps, you can help ensure that all the time, effort, and resources
you will be putting into developing and implementing your solution will be more likely to
make a difference.
Interview Box. Matt Flannery, Kiva Cofounder

and Former CEO; Branch Founder and CEO
TC: You are often cited as a leading example of a social entrepre-

neur. What does this term mean to you?
MF: Entrepreneurs who are building business with a social pur-
pose as a primary metric and financial as secondary.
TC: Kiva.org and Branch.co are two different models—does your
definition encompass both?
MF: I use the word business to refer to recurring, scalable, repeat-
able value streams. These can come in the form of income,
revenue, or donations. Those relying primarily on donations
from foundations or individuals in large amounts, I wouldn’t really consider a busi-
ness. A lot of for-profit enterprises that we never think of as social entrepreneurship are
really motivated by social change. It’s a blurry line used to describe something that’s
been done forever.
TC: How did you first get started as a social entrepreneur?
MF: Growing up, I always wanted to start my own company and had idea after idea and
literally made lists of ideas. None of these ever got implemented or really took off the
ground. What made Kiva different was that this time, it wasn’t about me. It was about
the people whose lives we were changing—they really wanted this and needed this.
When we first got back from Uganda after our first scoping trip, the community we
had spent time with kept reaching out, following up, and persisting. We realized we
have to do this, for them, we had to find a way to make this happen. It wasn’t about
us, or our idea. It was about them, their needs, and it had to get done.
Photo source: http://tulane.edu/socialentrepreneurship.
Photo from Kiva’s press center. Image provided by Kiva to advance its mission of connecting
people around the world through lending to alleviate poverty.
PART THREE: HOW TO SELECT YOUR TOPIC

One of the first questions that many readers ask is, “do I need to have a specific topic in mind?”
You might already have a clear idea of your topic of interest or even a preliminary idea of your
solution—or, you might simply be interested in the general idea of social entrepreneurship without
having a specific challenge in mind. This is completely okay—even those who think they already
know what they’re going to work on often end up implementing something completely different!
It is definitely recommended that you spend a generous amount of time exploring your interests
before honing in on a topic. Oftentimes, it can help to choose a learning topic, which you can
apply toward the exercises in this book, to gain practice and skills before graduating to a topic you
will work on after the book ends. You may even end up learning so much about your topic that
you decide to keep it for good, and implement a winning solution!
In thinking about your topic for the remainder of this book, a few helpful questions to ask
yourself are the following:
◾◾ What sociodemographic and geographic settings am I most familiar with?

◾◾ What are the needs in these settings? What are people asking for?
◾◾ What resources do I have access to, which I can mobilize in a helpful way?
◾◾ What skills and characteristics are my strengths and weaknesses?
◾◾ What are my passions, what drives me in life?
Subject Fields of Interest and Expertise

You will notice that your subject area of specialty did not appear in this list. This is because you
do not need to be a subject matter expert when you start. After you select your topic, you need
to mobilize the experts to help you bring together existing knowledge and create new knowledge
about your topic of interest. In fact, it is often those who are not specialized in a topic who are most
able to tackle it. Oftentimes, being trained in a subject area means that you have been habitualized
around existing practices—as a social entrepreneur, you want to question existing practices and
find a better way of doing things!
Sociodemographic Setting
Being familiar with a particular location and a particular population is a key strength in estab-
lishing a social venture. That is not to say that it is impossible to succeed in unfamiliar territory—
on the contrary, social pioneers do just that, chart new territories! This is simply to say that a
good place to start when thinking about your topic is asking yourself which places and which
peoples you have experience with. If you have experienced a social or environmental problem
firsthand, chances are, you’ll be better positioned to work with the community to co-create a
solution.
Needs-Based Framework
Thinking about your own characteristics is helpful in choosing your topic, but don’t forget, this
isn’t about you. Social entrepreneurs respond to the needs and preferences of the people they are
working with. In the setting(s) you are exploring, what have the people asked for? Do you have any
firsthand information or secondhand accounts on what they actually want and need? We will talk
more about this in the next chapter, but it is also crucial for you to be thinking about it from the
very start, and framing your thinking about choosing your topic based on the needs.
Access to Resources
Making a mental map of the resources that you have access to right now is another way to start
honing in on your topic. If you work in a large company offering a product or service to society, the
processes and resources that go into creating that product or service could be extended to meeting
the challenge you identify. If you are stationed in a university setting or a specific department,
the knowledge and skills of your peers and professors may be an untapped resource you want to
leverage. Of course, once you identify your challenge, you will still need to mobilize resources you
may not currently have access to. But thinking about the resources around you and how you can
leverage them for positive impact is a great way to start.
As a social entrepreneur, you want to question existing practices and find a better way to do it!
Strengths and Weaknesses

Knowing yourself is the first step to becoming a leader. While we are dynamic beings and our
strengths and weaknesses evolve over time, assessing your current skills and characteristics can
help you think about what you have to offer. Are you a person who enjoys research, digging up
facts, and exploring different options before you take action? Are you an ideas person, who gets
excited about potential solutions but may not always follow through on your leads? Are you a
great communicator, do you enjoy working with people, or do you prefer to work quietly in a
less social setting? All of these characteristics can be extremely valuable—there is no one win-
ning formula. The reason it is important to assess yourself is because in choosing your topic,
you are effectively matching yourself. Are you well matched to venture into a tropical forest?
Are you well matched to code software that can be used for a mobile app? What activities do
you excel at? It is completely okay to get out of your comfort zone and tackle a challenge that
might not be an easy feat for you, but it’s important to know your propensity so that you can
surround yourself with the people, knowledge, and other resources needed to complement your
skills and strengths.
Knowing yourself is the first step to becoming a leader.
Passion and Motivation

What drives you in life? If you wake up every morning thinking about a certain topic, then you
should definitely follow that lead! Most people don’t necessarily have one topic they wake up every
morning thinking about, but they do have certain parts of the living experience that they tend to
gravitate to. Some people enjoy working with others. Some people enjoy being in nature. Some
people feel the most alive when they are solving a complicated arithmetic problem. Ask yourself
what you would spend your time doing if you could do anything. Don’t be paralyzed if you can’t
think of one thing—make a list of all the different options and then think about the various
options on that list, perhaps narrow it down to a shortlist. Discuss with your peers and mentors.
Then you can look up information on each option, weigh it against the questions listed previously,
and start to get closer to your challenge.
Don’t be paralyzed if you can’t think of one thing—make a list of all the different options
and then think about the various options on that list, perhaps narrow it down to a shortlist.
Again, it is important to drive home the importance of thinking about all these questions
within the context of what is needed. Being a social entrepreneur is not about building your legacy.
As you will observe from the cases and interviews throughout this textbook, a key characteristic of
social entrepreneurs is that they leave their egos at the door. Being a social entrepreneur is about
responding to the needs and opportunities presented by others. So when thinking about the previ-
ous points and aspects, think of them in the context of assessing yourself as a resource for others.
Where could you best serve?
A key characteristic of social entrepreneurs is that they leave their egos at the door.
PART FOUR: DIGGING DEEPER

Collecting Information
In researching your topic, it is crucial to (1) be systematic and (2) keep track of everything. A good
way to do this is to get a logbook and record each step you take, gathering information one step
at a time. Even in conducting the most basic Internet search, record the keywords you entered
into the search bar and the number of hits or pages of hits that you surfed through. Out of these,
how many were relevant to your search? Take notes from each one, recording the website and
key points, so that you can go back to them as needed. This is crucial as a first step and simple to
execute. Otherwise, it is all too easy to lose track of your results, become overwhelmed with all the
information you will find, and not be able to go back and review key findings. Not to mention,
you may need your references and citations when you share your results with others! So this way,
you will already have a record of everything.
Common sources of information that you can draw on when first starting your investigation
are international development agencies, universities, think tanks, and other NGOs. International
development agencies can often serve as a helpful source of information on various social and
environmental challenges because they often dedicate a large amount of resources (both human
and financial) to gathering the existing evidence on any one topic. The World Bank, regional
banks, and various United Nations (UN) agencies (World Health Organization [WHO], UN
Children’s International Emergency Fund [UNICEF], UN Development Programme [UNDP],
UN Environment Programme [UNEP], Food and Agriculture Organization [FAO], and many
others) have focused on various topics and challenges over time. Most of these agencies have
created portals containing information and resources collected from other agencies, nonprofits,
governments, and universities worldwide on their topic of interest.
One such portal is the sustainable development knowledge platform, which consolidates informa-
tion on the UN’s Sustainable Development Goals (SDGs). These were created by the global community
in 2015 and agreed upon by world leaders. They stem from the historical Millennium Development
Goals, which were drafted at the turn of the millennium when the global community decided that
it was time once and for all for us to eradicate poverty, achieve universal primary education, achieve
gender equality, make drastic reductions in child mortality and improvements in maternal health,
combat major diseases, and ensure environmental sustainability. These were the overarching goals
of the human race at the turn of the millennium, to ensure that basic human needs were met for all.
While some progress was made, we are nowhere near successfully tackling these challenges, and more
entrepreneurial approaches are needed. Reading about the information that was collected around
each problem, the interventions that were designed to solve these problems in various settings and by
various players, what worked and what didn’t, is a helpful way to have a general overview which could
provide a useful background to your thinking about the social venture you are building.
While some progress was made, we are nowhere near successfully tackling these challenges,
and more entrepreneurial approaches are needed.
A wealth of information has become available on the social problems included within the
SDGs as a result of the resources pledged by the world’s leading development institutions, aca-
demic institutions, and all the world’s countries to meet these goals. Further information has been
created as various stakeholders (spanning the governmental, academic, civic, and private sectors)
develop programs and interventions to reach the targets specified within each goal. The challenge
you take up could be included among the SDG targets, or it could be something completely dif-
ferent. In both cases, it is well worth your time checking out the portal (https://sustainabledevelop
ment.un.org) and its predecessor (www.un.org/millenniumgoals).
A good way to approach your investigation is to start at the global level, then look for
regional sources of information, then zoom down to the country and local levels.
Another similar global portal is the World Bank data portal (http://data.worldbank.org),
where you can look up statistics from countries around the world. You can also find information
on national datasets, where most countries will also have household surveys and other national
information available on sociodemographic indicators and environmental and economic indica-
tors. Local NGOs may also have more small-scale data that will serve to be extremely valuable to
you in completing the picture and assessing variability in your social challenge at the local level.
A good way to approach your investigation is to start at the global level, then look for regional
sources of information, then zoom down to the country and local levels. Global foundations and
think tanks are another useful source of information, as they often invest time and resources
into thinking about and learning about the challenges they aim to tackle. Various examples from
around the world include the Clinton Foundation, Gates Foundation, Qatar Foundation, Agha
Khan Foundation, and many, many others.
Both of these types of institutions rely on academic and field researchers to produce and ana-
lyze the data they consolidate. Thus, universities and local researchers (whether contractors or
NGOs) are often the source of these data. These groups will also have their own websites and
centers dedicated to their topics of specialty. Many organizations also lie at the intersection of
academia and grassroots work, collecting evidence on what works and what doesn’t from out in the
field, analyzing and disseminating this information broadly for others to use in their own work.
These organizations are especially valuable to you. Two such examples are Innovations for Poverty
Action (www.poverty-action.org) and Millennium Villages (www.millenniumvillages.org). Such
organizations design and implement programs based on data collected by academic researchers
and evidence from the field and in turn share their results to add to the evidence base for further
analysis and dissemination.
Being your own investigator, it is important to know that it is very rare for any one source of
information to contain the complete picture. More often than not, even in peer-reviewed scientific
journals, for every scientific article, it is possible to find another article with contradictory find-
ings. Therefore, a top rule to keep in mind while characterizing your challenge is to always get a
“second opinion” (or a third, or a fourteenth)! Just like you would diagnose your health by meeting
with more than one health professional and doing your own reading, the same goes to diagnosing
and characterizing the challenge you are setting out to tackle. So whatever you do, remember to
be your own investigator.
Analyzing Your Results

If you do a good job of asking why over and over again and of recording this systematically as
we discussed previously, chances are, you’ll end up with a whole load of information! When you
are ready to step back and collectively examine the body of information you have gathered, a few
analysis tools and techniques might come in handy here.
Data analysis refers to the process of sorting through data to recognize patterns. What story
do the data tell? Because you are collecting secondary data at this stage rather than primary data
(which you collect next during the co-creation stage), it might be helpful to start with visual
tools. Researchers collecting primary data use other tools, which range from laboratory analysis to
statistical analysis. The good news is, they have already done this for you! At later stages in your
venture, you will most likely want to collect and analyze primary data of your own, to contribute
to the body of knowledge out there on this topic. But for now, let’s talk about some visual tools
you can use to organize the information you have collected stemming from others’ research and to
help you think about it in a way that will allow you to get to the bottom of it.
Tables are one way to organize your findings visually to help synthesize and analyze them.
This can help compare different pieces and sources of information across different subjects,
factors, or scenarios. For example, if you are conducting a literature review, or even a series of
informational interviews, a good way to organize the information is to type it into a table list-
ing each source, website or contact info, and key points. Then you can sit back and view them
collectively, noticing commonalities and differences in the key points or gaps that you need to
find other sources to fill.
Diagrams are another, if you want to show the association between two or more different fac-
tors. One example of a diagram is a new take on the old DAG, or direct acyclic graph. This is a tool
used in epidemiologic studies (those which study the pathways of disease) that can be adapted for a
general investigative purpose. Creating such a graph entails writing down the different factors that
are related to your challenge and then connecting them with arrows where the body of evidence
indicates that a relationship exists between two factors. The direction of the arrow shows which
Population-level example:
Income Education Health Income Children’s education
Children’s health
Future income, etc.
Individual-level example:
Poverty Poor sleep Lowered productivity More poverty
Figure 2.1 Examples of diagrams to help organize information.
factor influences the next (sometimes the arrow goes both ways), and a dotted arrow indicates that
you have reason to suspect there may be a relationship there but you’re not sure yet. Above the
arrows or next to the graph, you can list the sources of information for each relationship.
Of course, while drawing your diagrams, you may find that some relationships can be
cyclical too, with either positive or negative feedback loops (Figure 2.1). This is especially
the case in social outcomes, where the presence or lack of one factor leads to more or less
of another factor, which then further reinforces the presence or lack of the first factor. We
have already seen one earlier in this chapter: higher levels of education lead to higher levels
of health. You can add to this on both ends: on the back end, higher levels of income lead to
higher levels of education and health. On the front end, higher levels of education and health
lead to higher levels of income, which further reinforce the cycle in subsequent generations.
This example is at the population level. At the individual level, another example is sleep.
Poverty is correlated with poor sleep, which in turn is correlated with reduced productivity,
leading to more poverty.
A similar tool to organize and build on your thoughts about a challenge is also a new take
on an old technique, the Ishikawa diagram—also known as a fishbone diagram because it looks
like a fish’s skeleton. In this book, we’ll use a “flipped” Ishikawa diagram called the “Inverted
Ishikawa” to help visualize root causes. The original version was initially used in industrial busi-
ness and subsequently adapted to studying social and environmental problems.* The Inverted
Ishikawa starts by writing out the central challenge in a circle at the top of your page and then
drawing a line down from that circle. From that line, various off-shoot lines emerge, linking
various factors related to the challenge. Because every challenge has multiple factors influencing
it, and thus multiple solutions, this will help you flesh out the various possible scenarios to set
the stage for deciding in the coming steps how you and various other stakeholders might pos-
sibly work together to tackle it, either from various angles or by focusing on one factor (Figure
2.2). At the very bottom of the line will be the root causes: when you are not able to identify any
further branches, when you are not able to ask “why” anymore, this is where you have found
the roots.
* Ishikawa, K., & Loftus, J.H. (1990). Introduction to Quality Control. Tokyo, Japan: 3A Corporation. Wong,
K.C. (2011). Using an Ishikawa diagram as a tool to assist memory and retrieval of relevant medical cases from
the medical literature. Journal of Medical Case Reports, 5, 120–123. See: Andrews et al. (2012) https://research
.hks.harvard.edu/publications/getFile.aspx?Id=841.
Social challenge
Factors related to the challenge
Root causes—keep digging!
Figure 2.2 Visualizing root causes using the Inverted Ishikawa.
Let’s examine the following example on maternal mortality.* Let’s say you are working in a
rural area in a low-income country. Some of the factors influencing this outcome are lack of prena-
tal care (visits to the health clinic by the expecting mother before birth), unattended births (those
which take place in the absence of a health worker), and lack of medical facilities (such as clinics
or hospitals that can respond to emergencies taking place at or after delivery). If you keep asking
“but why?” you can tie these questions even farther back to limited resources at the government
level (weak health systems and infrastructure) and limited time and awareness at the household
level (mothers who need to work, don’t have time to travel to the nearest health center, and don’t
have knowledge about health-related needs and services). You could even keep asking “why?”
until you traced it back to geopolitical and historical forces that led to the poverty of this nation
(Figure 2.3).
At this point, naturally, you are feeling overwhelmed. “What can one aspiring social entre-
preneur do about all these major forces?” you might be asking. Don’t forget, at this stage, you are
not yet attempting to tackle this challenge. You will have plenty of opportunity to think about at
which level you want to tackle this challenge, as well as the feasibility of your solution, in future
stages. For now, your task is to understand the problem to its core. Understand who it affects,
where, how, and why. If you keep asking why until you get to the roots of the challenge, then you
will at least be closer to getting a sense of the full picture. In the next chapter, we will step back and
assess at what level you might actually be able to intervene. You may not have access to the govern-
ment systems or larger geopolitical forces, but you may have access to knowledge and services you
can help get to the mothers. For now, you are charged with combining the informational resources
at your fingertips to learn as much as you can about this challenge.
* You can view a short talk by Professor Matt Andrews of Harvard University on this exercise using a fishbone
diagram here: https://vimeo.com/91733930.
Maternal
mortality hs
irt
db
nde
e
La att
ck Un
of
pre
nat
al car
e
ies
c ilit
Limi f fa
ted t a cko
ime a L
nd a
ware
ness
Poverty Weak health systems and infrastructure
Corruption
Unstable government
Figure 2.3 Example Inverted Ishikawa visualization for a maternal mortality scenario.

In this chapter, we have taken the first steps toward building the solution—understanding the
challenge! The hardest part might be choosing one topic to focus on for the rest of the book. Give
yourself time on this, but then pick something and stick with it. Remember, you are doing this
as a learning exercise. You can, and will, go back and apply all the learning tools and skills you’ll
acquire in these chapters to other topics over time. For now, follow your passion and follow the
need—ask yourself where you can serve as the most valuable resource.
We have gone over the basic framework for characterizing a challenge and the basic types and
sources of information. If you have done your homework right, you will find yourself faced with a
huge amount of information! Now, it’s time to apply the framework above to help you synthesize
and analyze that information and look at this challenge from a holistic point of view. Time to step
up and deliver your milestones for this chapter:
Exercise: Your Challenge

At this point, you are tasked with identifying and characterizing your challenge. Now, you’ll start
building your knowledge base, upon which you’ll create your solution. Provide the answer to the
following questions using only one sentence each, unless otherwise specified. (Yes, it’s difficult to
summarize the wealth of information at your fingertips in one sentence only! This is an impor-
tant skill to master. Moreover, you’ll notice that the more you understand something, the more
concisely you’ll be able to convey it—when you’re unsure, you tend to ramble on, hoping you’ve
covered everything! So think first, and answer second.)
1. Describe what social challenge you will be tackling moving forward. How does it affect
people?
2. Who does it affect? Include statistics on the number of people affected.
3. Where is the affected population? Include information on the distribution.
4. What are the root causes, and what are the pathways by which these causes affect this popu-
lation? You can either provide a diagram here or write it out, using up to a sentence per cause
if needed.
5. What data sources and types have you used? List at least eight references.
6. Challenge question: In 800 words or less, describe previous attempts to tackle this chal-
lenge, what has worked and what hasn’t. (Make sure to specify by whom and where these
attempts were implemented.) Think carefully to yourself and review your answers to the first
five questions before answering this question. Reviewing the evidence and arming yourself
with data will serve as your number 1 weapon moving forward in developing a solution that
actually works!
CHAPTER SUMMARY
◾◾ The first step in a social entrepreneur’s journey is to identify and characterize the chal-
lenge she or he is tackling.
◾◾ Building your solution around the challenge and the people it affects is the best start
you can get in making it work.
◾◾ This includes familiarizing yourself with what others have tried before you.
◾◾ This chapter provides a framework for characterizing your social challenge, focusing
on what, who, where, why, and how.
◾◾ At this stage, you’ll be primarily dealing with secondary data collected and analyzed
by others, and in the next stages, you’ll head out to talk to more people and build your
knowledge base even further.
◾◾ Familiarize yourself with the different data sources and types described in this chapter
and how they might affect the results you are reading about.
◾◾ We’ve reviewed some key repositories of data including international organizations,
universities, and local organizations. Many of these are connected and build on each
other’s work.
◾◾ A good way to approach this challenge is by starting with the global knowledge and
statistics, then zooming down to the regional, national, and local levels to explore dif-
ferent sources.
◾◾ Most importantly, across all sources of information, keep asking “why” and digging
deeper until you reach the roots. A DAG or Inverted Ishikawa can help you visualize
this. Don’t forget to question all assumptions!
Chapter 3
Co-Creating with the

Community
Now that you’ve zoomed in on the challenge you’re addressing and learned everything you can
about it, the best people to figure out a way to solve this challenge are the ones most involved and
most affected. You can help facilitate, organize, and bring resources to the solution, but you can’t
create it from scratch all by yourself.
Ideas are easy to come by, but implementable ideas are not always as straightforward as you
might think. To find the idea that has the best chance of succeeding, it’s important to first live and
experience the challenge yourself. This chapter focuses on co-creating a solution working with the
people it’s being tailored for.
The best way to ensure that your solution is feasible and helpful to implement for a certain
target audience is to develop it hand in hand with that person and that community. This is part of
the research and development stage, a natural extension of the problem formulation stage you’ve
already started on, and a bridge to the solution you’ll implement. Before you’re able to design and
implement the solution, a careful assessment and co-creation process is in order.
For this, we’ll draw on different fields of study and practice in defining what it means to co-create
and how to go about co-creating your solution. From the field of community-driven research, we will
explore different steps toward participatory planning, identifying solutions and assets in the commu-
nity and exchanging knowledge and capacity. From the field of human rights, we’ll discuss what it
means to ensure accessibility, affordability, and acceptability in any basic social product or service. We’ll
also draw on key principles from the field of leadership skill building and well-known best practices.
Finally, we’ll review an example of community-driven planning that resulted in a viable social venture.
“Community”—What Does This Mean?

A community is a social group bringing together individuals sharing one or more things in com-
mon. They could be either living in the same place and facing the shared challenges and opportu-
nities associated with that place, or they could be a subpopulation with a shared culture and way of
living. Within any community, there are always diversity and variability. A community is a good
41
starting point to understanding the social challenges faced by different groups of people and how
each group interacts with that challenge. Once you are immersed within a community, you will
gain an understanding of the individual variabilities that lie within.
Piecing Together Pieces of the Puzzle

In most cases, you will discover that the solution you are seeking to formulate is not a mysterious
and elusive nor necessarily a complex or sophisticated new idea. Rather, the most likely solution
you will find is a simple one that brings together existing pieces at the community’s fingertips. As
the social entrepreneur, you are adding value by bringing together the pieces of a potential supply
chain that already exist in some shape or form. The solution is out there; its different components
are already in the community or an arm’s reach away, and the job of the social entrepreneur is to
build a new vision of putting them all together.
This is why your solution is not likely to be a head-scratching new concept that requires a
genius mind nor rocket science. It’s definitely not something you are going to find in the library.
You need to get out there and figure out how people are interacting with this social challenge, what
resources are available, and how people can come together to interact in a more positive way with
this challenge, resulting in a more positive outcome. You don’t need to start from scratch or rein-
vent the wheel. Even if—especially if—your solution involves a new technology, it is important
to be aware that there have actually been very few cases where a new advanced technology devel-
oped entirely in a lab or institution of higher learning has been scaled to effectively solve a social
problem in different settings far away from that lab. The most impressive and effective cases have
involved a simple mobilization of existing resources, including human resources, to work within
the existing framework of a community and put together the different pieces of the puzzle (Figure
3.1). The different pieces are already there; the most challenging aspect is often simply identifying
them and finding a way to put them all together into a complete solution.
The Social Entrepreneur as a Connector

Have you ever heard of the game “six degrees of separation”? A common parlor game that builds
on the theory that all humans can be connected by six degrees of separation, it challenges the
player to link together two seemingly impossible people. When piecing together the different parts
ial and
Soc tal Experts
cap
i leaders
Your solution
Infrast
ruct
and reso ure Id ea s
urces
Figure 3.1 Putting together the different pieces of the puzzle.

Co-Creating with the Community ◾ 43
of the puzzle in your social challenge, think about the connections that might already exist, which
you just have to put together. What are the six degrees of separation between Ana, an inhabitant
of a remote village, and the healthcare services she needs? Of course, there may be more than six,
or even less. With your Inverted Ishikawa from Chapter 2, you will have already explored many of
these. Which of these do you have the opportunity to bring together?
During the co-creation process, try to think of your role as a Connector, as described in the
book The Tipping Point by Malcolm Gladwell. After all, aren’t you trying to tip this challenge? A
Connector is someone who knows a large number of people and who can connect others through
a smaller degree of separation than the average person can. For those of you thinking, “what if I
don’t know that many people?” this concept can be extended further than just one’s social net-
work, by considering the common characteristics of connectors: Connectors often exhibit curios-
ity, versatility, confidence, and energy for new links between people and ideas. They see things in
others that others themselves may not see. Their work spans many different worlds; they occupy
diverse communities, subcultures, and niches. They have an instinct that helps them relate to dif-
ferent peoples and populations. Chances are, you probably exhibit at least one or more of these
characteristics!
In this sense, as a social entrepreneur, one of your most important roles is to serve as a
connector—keenly observing the different resources, stakeholders, opportunities, and gaps in
your community and finding ways of putting them all together. Keep your eyes open for those
untapped resources, talk to as many community members and stakeholders as you can, and build
your base of supporters who will champion your solution. Also keep in mind which of these char-
acteristics you have and which you’ll need to look for in others you’ll want to recruit for your team!
In describing the power of the connector, Gladwell points to the social power conferred by
social acquaintances, who we rely on to open up new worlds to which we don’t belong and give us
access to new opportunities. This underscores the importance of going beyond your own network
to find the existing connectors inside your community. You are not the only entrepreneur out there!
Whatever field you are venturing into, find out who’s been doing things differently in that field.
Who has pioneered new ways of interacting with the social challenge you’re facing and of
facilitating more positive ways for others to interact with it? Who are the local entrepreneurs and
leaders that people turn to? This is a good place to start when connecting the dots. Find the sources
of social capital, to extend the leverage you already have yourself as a connector.
Catalyzing Change
By connecting the existing pieces of the puzzle, you are acting as a catalyst. Just as an enzyme
brings together different molecular components and catalyzes the formation of a new molecule,
the connector brings together different people, ideas, and resources and catalyzes the formation
and implementation of a new social solution. “The closer an idea or product comes to a Connector,
the more power and opportunity it has.”*
The key point to remember here is that you need others. The enzyme is only serving to bring
together the components of the molecule; without these components, the new molecule is not cre-
ated. Just as we rely on connectors to put us together with new people, we rely on others to put us
in touch with information and other resources.
* Gladwell, M. (2002). The Tipping Point: How Little Things Can Make a Big Difference. Back Bay Books, p. 55.
Just as an enzyme brings together different molecular components and catalyzes the forma-
tion of a new molecule, the connector brings together different people, ideas, and resources;
and catalyzes the formation and implementation of a new social solution.
Who Is Your Starting Team?

Before you venture out to collect more information on your challenge and the people it affects,
put together a “starting team.” This team will change and grow as you add members of the com-
munity and other players to the picture. It will continue to evolve as you search for specific talents
and skills along your journey to help you formulate your solution and build your venture. But for
now, what is your starting point? Don’t go at it alone. It could be colleagues, classmates, friends,
or other contacts. It could be local leaders, grassroots organizations, and other social networks.
As you think about what steps need to be taken, think about who needs to be by your side to help
make sure you don’t drop the ball!
A practical way to assemble your starting team is to recruit those already around you. If you’re
building your social venture within the context of an existing organization, tap into your human
resources department, colleagues, volunteer groups, and interest groups and assemble a starting
team who will hit the pavement with you and support you. If you’re working on this as part of a
university course, look for resources inside your university. Are there teachers, researchers, staff
members, student groups, or others who would be interested to help?
If you’re starting out on your own, what existing groups and resources can you tap into? These
could include interest groups, study groups, youth groups, faith groups, professional networks, or
a multitude of other social structures bringing together like-minded people. Is there anyone you’ve
worked with or volunteered with in the past who might be able to help? Have you contacted the
research groups whom you read about over the course of your research during the previous chap-
ter? You might think you are alone, but chances are, there are multiple people out there trying to
tackle this challenge, and your best shot is to find ways to join forces with them.
What skills do you need? Look not only for those whose interests match yours but also those
whose skills complement yours. If you are a numbers person, you’ll definitely need to take along
a people person—and vice versa! Look for diversity in age, background, gender, and other char-
acteristics because it will help you to have multiple people looking at the situation with multiple
perspectives.
Interview Box. Libby McDonald, MIT CoLab

Director of Global Sustainability Partnerships*
TC: Libby, you are best known for building businesses with waste
pickers in Central and South America. What has your work
with waste pickers taught you?*
LM: What I’ve learned is that you can design systems for zero waste
by building many businesses and linking together. To do this,
you need to co-create with the existing local entrepreneurs in
the community. Finding your local entrepreneurs is the most
important step. You have to work alongside someone.
TC: How do you go about finding the people in the community
to co-create with?
LM: I followed the trash, and that’s where the entrepreneurs were! These were single women
with eight or more children, and they had to make a living. When I go into a com-
munity, it’s really the women and children that are the poorest, and they are also the
game changers. Innovation exists at the margin because people who have nothing,
have to survive, and so I work with these survivors.
TC: You recommended the waste pickers’ social enterprise case study. Why do you think
it’s important to study this example when learning about the principles of social
entrepreneurship?
LM: Solid waste management is one of the most pressing problems worldwide and affects
the most marginalized people. Globally, there’s a growing movement around waste
pickers; there are about 20 million people worldwide collecting and sorting garbage;
and they have organized into municipal, national, regional, and international unions,
sharing strategies for how they were growing waste sector businesses. Corn Island just
outlawed plastic bags and they’re about to outlaw plastic bottles. This was their big-
gest problem and they solved it through social entrepreneurship; they created a water
purification social enterprise and cloth bags made by women.
TC: How do you build a business out of waste picking?
LM: The first thing you need to do is an assessment: you’ve got to figure out your supply
chains. It’s really a volume enterprise. If you put together enough municipalities,
you can get the volume needed. We had to build networks of waste enterprises. One
business wasn’t going to make enough money for these women, so we had to launch
several. We started by serving local institutions: we mapped out their locations and
took care of their waste needs. We now have a waste-to-energy business. We built a
biodigester. The only way we could survive was to diversify.
TC: What is the hardest part of co-creation to you?
LM: The ability to imagine and the ability to have confidence to realize your dreams. It’s
like a Polaroid picture where it first comes out and you can barely see it; you have to
shake it, and then the image becomes clear. Many of the women I work with, when we
first start, haven’t found the voice yet to be able to say, “This is what needs to be done,
this is why we should be the ones doing it, and this is why you should be paying us.”
* Title at time of interview (Feb 2015). Current title is Executive Director, Prosperity Catalyst (as of Apr 2015).
Interview Box. Albina Ruiz, Founder and CEO,

Ciudad Saludable, Lima, Peru
TC: Albina, you’ve been working in the waste sector for 30 years,
but you only formed your organization 13 years ago. Why
did you wait so long?
AR: I wasn’t sure I could manage my own organization! Plus, it
takes so much time to build results. First, we just needed to
focus on doing the work. It took years to build trust within
the waste pickers community, and even more years to build
partnerships with the local businesses and municipalities.
TC: Tell us more about how this all started, 30 years ago.
AR: I grew up in the jungle, my parents were small farmers. I begged them to send me
to the city to study, and in the end, they saved up and bought me a one-way ticket.
When I got to Lima, I was shocked. I had never seen or heard of garbage before. In
the jungle, we don’t use plastics. And our food waste, we don’t think of as waste. It’s a
resource, we are very careful with it, it has great value and we use it for our livestock,
fertilizer, etc. In Lima, there were literally mountains of garbage! I couldn’t believe my
eyes. I lived in the slums, and I noticed that the garbage was the worst where the poor
people were.
TC: What was the first thing you did?
AR: I talked to the government workers and asked why they didn’t remove the garbage in
the slums. They said the poor people don’t pay for their services, they like the dirt. I
said it’s not true, I am one of them! I went to the dump to talk to the waste pickers.
There were mosquitoes, rats, cockroaches, dogs eating garbage. It was a horrible situ-
ation. I made it my goal that there would be zero waste pickers working in the dump.
TC: So how did you get from that situation to where you are today?
AR: It took a very long time. The waste pickers were afraid to work in the city. They don’t
believe in the municipality or anybody. I told them, “You are the entrepreneurs.” We
had to talk to the municipality, to the businesses in the city, to offer our service. Now,
each year, we have a convocation with the municipality. We worked with the govern-
ment to give financial incentives to municipalities to work with waste pickers. We had
to advocate for new law. Today, there is a national program to sort garbage; we wrote
this law! Now, they are not waste pickers anymore; we call them recyclers. It was a
long, long road.
TC: What are the next steps?
AR: Next step is for families to pay directly to the recyclers. The neighborhoods and fami-
lies believe in them. We are already starting this in one neighborhood. We have ID
cards for each recycler, and people trust them.
TC: Working with the government, didn’t you ever face any corruption?
AR: We did! Big companies offer services to municipalities and get a lot of money but don’t
want to recycle. But after we made this law, municipality has to work with waste pick-
ers. It took years to approve, and more years to implement. Now, we are getting the
Ministry of Economy to provide incentives program for municipalities and to citizens

to separate their trash.
TC: How will you expand beyond your first sites?
AR: We can only do this by working with others. We made three toolboxes for other
organizations like us to work on the different things we do. To do the landfill studies,
work with waste pickers, recycling factories, local law, and national law. We made
a national round table on recyclables, where big companies sit side by side with the
waste pickers micro-enterprises “rueda de necogios.”
Step 1. Assessing Stakeholders for Knowledge Exchange

One of the ways in which you can act as a catalyst is to bring together local knowledge and global
knowledge (Figure 3.2). This knowledge exchange is the first step in building your solution. The
number 1 experts are those interacting most closely with the challenge you are taking on. So the
first question to ask yourself is, what are the different segments of the population that are faced by
this challenge? What is the experience of each one? Segments of the population refer to the differ-
ent sociodemographic groups we talked about in Chapter 2. Do people of different ages, genders,
income, backgrounds, locations, etc., interact with this challenge in different ways? What insight
can you gain from each one? We will talk about different techniques for gathering this informa-
tion in the pages to come.
Professionals, industry
Different Catalyzing
population knowledge Academia,
segments exchange research
Local leaders and

entrepreneurs
Figure 3.2 Generating new knowledge.

Who Are the Key Players?

Now that you’ve identified your starting team, the next step is to identify who exactly you’re going to be
co-creating with! Each community you work with will have multiple stakeholders within and external
to the community. A stakeholder is anyone who will influence or be influenced by the process or out-
come of your intervention. This includes individuals, organizations, business, policymakers, and gov-
ernment. Anyone with an interest in this social challenge, anyone who has a stake in it, is a stakeholder.
You may have been focusing on those affected by the social challenge up until now—but what about
those who are part of its root causes? It is not enough to co-create with your potential end users, who
will be your customers for your end product, you also need to work closely with those who will be part
of the supply chain—the different parts of the solution—they will be part of designing, building, and
implementing your solution. All of these groups of people are considered stakeholders in your social
venture. Therefore, before we proceed any further, let us take a deeper look at stakeholder analysis.
Tool: Stakeholder Analysis

A good way to prepare yourself to organize the information you have about your stakeholders is to
equip yourself with a stakeholder analysis table to fill out as you progress. This lists all the potential
customers, suppliers, competitors, collaborators, partners, and other types of stakeholders. Spend
some time sorting through the potential individuals, groups, and institutions who interact with
this challenge. How would they interact with a potential solution? What is the potential role they
could contribute to your development and implementation of the solution? You won’t have most of
the answers to these questions when you first start; they will help give you a sense of what informa-
tion you should be looking for along the way.
As your picture of the challenge and potential solutions forms and solidifies, you will need to
update your answers as they may apply to potential ventures you may be developing. At each stage
in your venture in the future, make the time to stop and ask yourself what the current attitudes
are. The answer might be constantly changing each step of the way! Are various stakeholders sup-
portive, antagonistic, neutral, or undefined as yet? And what is the role we want them to play? Do
we want them to go from being a competitor to being a collaborator? If they are neutral, what steps
can we take to move them across to being supportive? This will depend on the potential benefit or
harm of any prospective solution to each stakeholder. As you progress with your research, you may
change your mind about the positioning of one of the stakeholder groups and have to adjust your
plans and resources accordingly—or better yet, you could change their minds!
Stakeholder analyses can come in many different sizes, shapes, and forms. They can be a full-
length narrative document with one section for each of the previously mentioned questions, or
they can be summarized in a simple table for an early-stage start-up. Some organizations have
intricate diagrams depicting their numerous stakeholders, while others have a few bullet points.
At this stage, you will want to keep it simple yet comprehensive. Many helpful templates for this
analysis are available online.* An additional dimension to think about is the level of influence of
each stakeholder. A common way to do this is using a simple four-way table (or nine-way table, if
a middle level of “moderate” is inserted), as depicted in Figure 3.3.†
* One example template is available at http://www.setoolbelt.org/resources/2031, adapted from the WHO and
other original sources.
† For more ideas and information, see http://www.institute.nhs.uk/quality_and_service_improvement_tools
/quality_and_service_improvement_tools/stakeholder_analysis.html.
High
Win over Build alignment
Influential Potential partners,
stakeholders whose collaborators,
buy-in will help you competitors. Seek
succeed. Consult with ways to join forces to
and keep them work toward the
informed regularly. same mission.
Influence
Mobilize Engage
People who are less Key stakeholders who
clearly involved. If could be most
time and resources affected. Engage them
allow, build interest by every step of the way
demostrating shared to increase their
value. influence.
Low Interest High
Figure 3.3 Stakeholder mapping to plan for action.
Step 2. Community-Driven Research

Defining the Agenda
Thinking about your stakeholders will help make sure you’ve identified the key players and started
to prepare the primary questions and feedback you’ll be asking of each one. You may have already
started to form a vision for what challenge you’d like to tackle and what changes you’d like to see,
but your vision will only solidify into an actionable mission and venture once you hear from the
various people affected by this challenge. What are their priorities? What are their needs? Has the
way you’ve been approaching this and thinking about it been aligned with their realities? What
can you do to learn more about it, experience it firsthand, and figure out how you’re going to start
building a solution?
There are existing social change agendas for each stakeholder. Don’t form your own without
understanding these and understanding the different ways you can contribute.
Before you start, make sure you think about sensitivities you should be watching out
for. These could be social, cultural, or political. Various groups of people have various back-
grounds and dynamics underlying their relationships and behaviors toward one another.
Whatever you do, you need to proceed cautiously. This is why it is impossible to hammer
home enough the importance of working in a setting you are familiar with or investing the
time to familiarize yourself deeply with a setting when venturing into new territories. Being
part of the community, living in it, and experiencing for yourself the social challenges it faces
are always, always the first steps. There are existing social change agendas for each stake-
holder. Don’t form your own without understanding these and understanding the different
ways you can contribute.
Understanding the People, Places, Problems, and Potential

Once you have identified your stakeholders, you’ll need to carry out different approaches for the
first knowledge exchange with each group. Some might be more amenable to one-on-one meet-
ings. This will most likely be the case with local NGOs and other grassroots organizations, which
may offer opportunities for in-depth and rich exchange of information and experience. With oth-
ers, such as the multiple population segments, larger gatherings such as conferences, round tables,
or town-hall-style meetings might be a more comfortable fit.
A general rule of thumb is to keep a low profile in the initial stages, especially during introduc-
tory meetings with the various stakeholders. This will help make sure you don’t unintentionally acti-
vate sensitivities and help you slowly build a deep understanding of community issues and dynamics
before you start gaining momentum. Once you have that sturdy foundation, you will feel more
confident holding bigger and more high-profile meetings with less of a risk of a faux pas as they say!
Think about a community or small group that you have belonged to in the past. It could be
family based, school based, faith based, activity based, friendship based, etc. Think about all the
dynamics, history, and nuances that characterized the interactions between people in this group.
This is the level of familiarity you need to have with any setting you are working in!
Research Tools
What defines community-driven research is that it is conducted for, by, and with the community.
It’s not just you and your starting team as a group of outside researchers studying the community!
Most people don’t like to be studied.
It’s you as a catalyst and connector, bringing people together to exchange knowledge about
their interaction with this social challenge. Ideally, you’d like to put together a research team
bringing together members of various stakeholder groups to carry this out.
Tools and techniques needed to gather information from multiple stakeholders are summa-
rized in Figure 3.4. Depending on the situation, topic, location, and social preferences, you will
craft your own combination. These include door-to-door surveys, focus groups, town hall meet-
ings, one-on-one meetings, and other creative ways to exchange knowledge. Contests, confer-
ences, and workshops might be used in some cases. Outdoor events bringing together different
groups in the community might be another. It depends on where you are, what your topic is, and
what people are accustomed to. Ask for people’s feedback on what techniques they suggest and
what they think would work best. Your technique will also differ on whether you are bringing
together like-minded people to get their feedback (which is more common in the earlier stages)
• Door-to-door household surveys
• Focus groups with various subpopulations
• Interview with community leaders Tools used to conduct

community-driven research,
• Questionnaires with community members stakeholder analysis,
asset mapping
• Round table discussions
• Conferences and workshops
Figure 3.4 Community-driven research.

or bringing together diverse groups to exchange knowledge between themselves (which is more
common as you progress).
Ask for people’s feedback on what techniques they suggest and what they think would work
best.
All of this requires ongoing ties to the community, connectedness between the stakeholders,
and active relationship building. This is one of the most important investments of your time. In
fact, as your venture develops, building relationships with end users and other stakeholders may
end up consuming the majority of your time, while technical aspects are delegated to others.
This is especially the case in the co-creation phases, before you get to the design and business
planning phases. This is because the end users themselves inform the design and costing and other
factors, by having a role in the development of the solution. As such, community-driven research
requires not only multiple sources of expertise but also a large amount of flexibility and creativ-
ity in bringing people together to develop the methods that you will use to collect and exchange
knowledge.
Community-driven research requires flexibility and creativity in bringing people together to

develop the methods that you will use to collect and exchange knowledge.
Research Tips and Techniques

You will likely be using a combination of multiple research tools from Figure 3.4 to gather the
different types of information you’re looking for. A few tips to keep in mind across research tech-
niques are as follows:
◾◾ Keep it simple
When preparing your questions, whether written or oral, keep them finite in number.
One consideration here is that you want to start with general questions in order to avoid
overwhelming people. A second consideration is that you want to leave room for the
unknown to emerge. If you have too many questions that you need to get through, there’s
no space for your participants to bring up questions of their own! While it’s important to
come prepared in order to provide a structure for the conversation, it’s also important to
be flexible, open, and encouraging for participants to divert the conversation or add new
topics or perspectives.
◾◾ Listen!
The number 1 thing you are trying to do here is hear people. If you’re coming in with
prejudgments or predeterminations, you won’t hear what people have to say. Start with an
empty slate and an open mind each time you talk to someone. Each person and each group
will have completely new perspectives and experiences to share. Your role is to talk less and
listen more. Also, debrief with your team afterward, to learn what they heard too. Each
person has a way of noticing nuances in others, and your teammates might have picked up
on observations you may have overlooked. Stay focused while conducting your research, and
then share your observations after each piece of research is conducted. This will multiply the
information you are able to collect.
◾◾ Diversify
Sometimes, it’s helpful to ask the same question in different ways, to different people, using
diverse methods. This is why you will most likely want to use more than one of the tools listed
previously to understand your challenge. Each tool has its advantages and disadvantages. For
example, conducting one-on-one interviews with community members has the advantage of
creating more privacy for the person being interviewed. Maybe she or he wants to share infor-
mation, experiences, or perspectives with you that she or he doesn’t necessarily feel comfortable
exchanging in a group setting. On the other hand, focus groups allow for people to build on
one another’s contributions, reinforce or conversely bring out points of differences, highlight-
ing group dynamics, and reaching more people. A focus group is basically an interview con-
ducted with more than one person at the same time. Focus groups usually include less than 10
people; depending on the situation, they could include a small handful such as 4 or 5 people,
or they could include up to 12 or 15. Once you start getting closer to 20 people, you’ll find
yourself more in a “town hall” type of situation. Here, you’re less likely to be able to go into as
much depth on any one topic as in a focus group, but you’re more likely to gain different per-
spectives and reach a large number of people. Using more than one of these techniques, while
keeping in mind the cross-cutting tips, can help make sure you gain a more comprehensive
understanding of the challenge you are tackling from different perspectives and dimensions.
Step 3. Creating Collective Capacity

Key questions you want to be asking yourself during this time are the following: What are the char-
acteristics of the local community that can be leveraged as strengths in building your network, solu-
tion, and distribution channels? Who are the key resource people? What is the existing infrastructure
that you will be operating in? No enterprise operates in a vacuum, and this is especially the case for a
social enterprise. Your added value as a social entrepreneur is to identify those assets that are currently
not being tapped toward providing a solution and bringing them together to bridge the gap between
your challenge and the available resources that can be leveraged to tackle it.
One of the outcomes of co-creating with the community is building collective capacity. By
bringing people together and transfusing knowledge across boundaries, you are breaking silos and
generating new resources. You are not simply taking an existing solution and introducing it in a
new setting. You are taking an existing challenge faced by this community and working with them
to develop a solution. There may be similar forms of this solution that exist elsewhere, but by co-
creating it with the target audience, you are in effect creating local capacity to deliver it in this setting
(Figure 3.5). It is not only the product or service which you are creating, but also the human capital.
This approach that you are using in the co-creation stage will stay with you throughout your
social venture. Each step of the way, rather than thinking what resources you’ll need as input, you
will be thinking of what resources you’re creating as outputs, which will have a ripple effect.
All too often, organizations think of human capital as an input into their work. How many
people do we need to hire, what skills must they have, and how much do we need to pay them are
commonly asked questions in building a new venture or growing an existing one. If you challenge
yourself, however, to think of human capital as an output, your social impact will be multiplied
many times over. By implementing your social venture you are not only leveraging existing human
capacity but also growing it and building capacity, building productivity, creating new skills, and
Different
Professionals,
population
industry
segments
Knowledge building Capacity building
Local leaders, Academia,

entrepreneurs research
Figure 3.5 Creating collective capacity.
creating new markets. Thus, accounting for human resources should take place not only when
accounting for your inputs but also in thinking about how to characterize your outputs and what
you want to contribute to that community.
The Goal: Conceptualizing the Solution

Understanding who your stakeholders are, what their needs and preferences are, how they do
things, and what they feel are different opportunities to do things differently is the first step in
working together to identify potential solutions.
You may be working on your own as a student or midcareer professional—or you may be part of
an existing organization that is aiming to develop a product line as a social business. Or you may be
working as a group of individuals aiming to make a social change in your community. In all these
cases, there are many factors involved in determining whether you will be able to develop a solution
that will stick. The most likely scenario is that the solution you are aiming to develop will involve
a lot of moving parts. The implementation, the supply chain, the end user, the competitors, and
collaborators and other stakeholders—these must all be taken into account during the first stages
of preconceptualization. Because you alone cannot determine the success of your solution’s imple-
mentation, by extension, you alone cannot conceptualize it. Any stakeholder who will be remotely
linked to the success of your solution must be part of its conceptualization in some shape or form.
Because you alone cannot determine the success of your solution’s implementation, by exten-
sion, you alone cannot conceptualize it.
The Process: Mobilizing the Community

Many leaders fall into the trap of thinking they have the perfect solution and no time is to be
wasted in implementing it. Rushing to get the job done, they assume that once it is complete,
everyone will see what a worthy solution it was and will be grateful that it has been done. In real-
ity, the more likely scenario is that successful solutions to social problems and opportunities will
require the collaboration of many stakeholders, and involving the stakeholders from the beginning
is one of the best ways to ensure that they have a sense of ownership in the solution and a vested
interest in its success. Thus, while a leader’s drive for results and efficiency may tend to cause her
or him to act first and ask later, it would behoove any social entrepreneur to invest the time in
mobilizing the community from the start.
In the field of leadership skill-building, this is one of the top rules voiced by leadership train-
ers: time spent obtaining buy-in from key players at the start is time well spent. No matter how
well thought out your solution is and no matter how high your estimated social impact, if your
stakeholders do not feel that they were part of its creation, you will likely encounter resistance.
This is because satisfaction with the process is as important as satisfaction with the outcome—
and can even overshadow it. Even if you have the perfect product or service, if your community
feels disgruntled with the process with which you developed it, they most likely will not adopt
it. Conversely, if you are not able to build the perfect product or service due to restrictions in
the environment in which you are operating, but the community understands how and why you
ended up with this product and service as it is being offered, they will be more likely to accept it
and feel that it meets their needs.
While your drive for results and efficiency may tempt you to act first and ask later, it behooves
you to invest the time in mobilizing the community from the start.
The Key: Incorporating Local Infrastructure

Beyond exchanging knowledge at this stage, it is critical for you to map out the landscape you’re
working in. What is the infrastructure like—both in terms of social networks and physical
strengths and limitations—and how will you design your solution accordingly? Defining what
you will change and what you will work with is one of the most valuable thought questions you
can go through from the start.
Asset mapping is an exercise that can help you organize information on this level. As discussed
previously, human resources are one form of assets that exist in the community, which you will
need to characterize and which you will need to grow. Physical resources are another form of local
assets that will inform the development of your solution. What physical resources are available
to you that are relevant to the needs and opportunities you are addressing? These could include
natural resources (water, vegetation, soil), and they could include infrastructural resources such as
roads, factories and their products, and built structures. Financial resources are also a key input
and a key output at the same time. In order to determine during the business planning stages
down the line how these resources will flow in and out of your social venture, it’s important to
conduct an inventory before you start. Asset mapping is an exercise whereby you identify the dif-
ferent resources available to you and evaluate what resources you need, where you will get them
from, and how you can leverage the strengths of your local setting and incorporate weaknesses.
Financial
capital
(income,
Natural wealth,
investment) Built capital
capital
(utilities,
(biodiversity,
roads, health
earth, soil,
systems)
water, air)
Sustainable
Cultural development Political
capital outcomes capital
(traditions, (inclusion,
preferences, voice, power,
language) laws, policy)
Human Social capital

capital (leadership,
(education, networks,
health, skills) building trust)
Figure 3.6 Examples of community resources identified through asset mapping.
Examples of the different types of resources you may identify are depicted in Figure 3.6, which
is adapted from the community capitals tool and framework for evaluating strategic interventions.
This framework was developed by a group of community researchers based on their analysis of
entrepreneurial communities.* They observed that communities that were successful in demon-
strating sustainable development not only addressed and incorporated these different types of
capital into their work but also took into consideration opportunities for synergistic interaction
building on the different types of resources.
In order to determine during the business planning stages down the line how these resources
will flow in and out of your social venture, it’s important to conduct an inventory before
you start.
Your challenge is to co-create a solution that is feasible within the local context, culture, envi-
ronment, infrastructure, and economy. Not only that, your goal is for it to thrive in that setting.
Therefore, an important step in co-creation is to assess that setting and thoroughly characterize
it so that the solution you develop will be the right fit and will operate based on resources that
are the right match. Asset mapping can help pave the way by identifying available skills, points of
leverage, and strategies to diminish deficits.
* Flora et al. (2008). See http://www.soc.iastate.edu/staff/cflora/ncrcrd/capitals.html. A helpful handout can also

be downloaded at http://wp.aae.wisc.edu/ced/wp-content/uploads/sites/3/2014/01/204.2-Handout-Community
-Capitals.pdf.
Participatory Planning
The types of community-driven research depicted previously are the foundations of your partici-
patory planning process. Setting your action plan moving forward will depend on the resources
available to you and how things are done in your community. How can you build a system that
puts together the different assets and links them together sustainably? What are your strategies for
effectively engaging your community in a deep dive participatory process?
A popular way of bringing together different stakeholders to identify resources and ideas for
potential solutions is to organize a visioning workshop. This is an event that usually lasts more than
one day, whereby people affected by and interested in solving this challenge are brought together.
They start by identifying needs, priorities, shared interests, and preferences to establish common
grounds. They then work together to formulate common objectives and a larger vision for social
change. This can be a powerful way of building a sense of ownership over potential solutions from
the start and more importantly tailoring those solutions to meet identified needs and priorities.
The key here is to have multiple stakeholders partner to organize and implement the event.
Once you have mapped out the assets of your local context, create a learning plan. What ques-
tions remain to be solved? At what point is it okay to begin? If there are various ideas arising, how
will we decide which idea(s) to test out?
Where Are the Local Entrepreneurs?

Most importantly, remember what we said at the beginning of the chapter, about not reinvent-
ing the wheel. One of the first questions you set out to answer was, what are the different ways in
which things are done in this community? In understanding how people interact with the social
challenge you are investigating, have you identified any solutions that have been applied on a small
scale by local entrepreneurs that can be built on?
In every community, there are people who are already implementing solutions. By now, you will
most likely have identified them through your community-based research, stakeholder analysis,
asset mapping, and participatory planning. How can you learn from these individuals? Sometimes,
their innovations are simply band-aids, and sometimes, they have the potential to be built into
larger systems. In both cases, they will almost certainly contain clues for you to dig deeper into.
Examining Local Supply Chains

First, what are the characteristics of the solutions they are implementing? Are they low cost, are
they easily accessible, are they user-friendly and simple to understand? On the flip side, where are
there spaces for improvements? Do they easily break down, are end users noncompliant with high
dropout rates, are there characteristics that make these solutions hard to scale beyond a microlevel?
Learning from what is already being used is often the first step in building your solution!
Second, there is most likely a rich mine of data made available to you from examining the
entire supply chain. Where do the local entrepreneurs get their supplies from, where do they sell
their products or services, and who buys from them? Are they at capacity, is the demand high or
low, and is there room for growth? What are the growth barriers? How much are people willing to
pay, how much is it costing the local entrepreneurs, and how much are they profiting? What are
the social and cultural obstacles they are facing? Your field research will give you not only answers
to these questions—beyond insights to inform the ideas behind your solution—but also data to
inform your business planning as you proceed.
Join forces with others on the ground, if and when this is possible! There will still be plenty
of opportunity to innovate, build social business, create value, and disrupt the status quo by
working with others.
Last but not least, don’t fall under the delusion that social entrepreneurship means starting
from scratch. If you find someone who is already tackling this social challenge and it is possible
for you to work with them, don’t start your own shop! This is one of the key pieces of advice
offered time and time again by social entrepreneurs all over the world. Join forces with others
on the ground, if and when this is possible! There will still be plenty of opportunity to innovate,
build social business, create value, and disrupt the status quo by working with others—in fact, the
opportunity will be greater in most cases, rather than each one working on her own.
Checklist: AAAQ
In implementing community-driven research and participatory planning, we can draw lessons
from interventions and programming in the field of human rights. When you are co-creating with
the community, you are following what we call a rights-based approach to sustainable develop-
ment. This has been reflected by the participatory aspect of your work and by your assessment and
incorporation of local context and landscape, including political assets such as policy frameworks
and conflicting national laws. Exhibiting transparency and accountability to your stakeholders is
another aspect you have laid the groundwork for at this stage and must continue to do so by shar-
ing information at each step along the way as you implement and grow. Taking into consideration
and including all possible stakeholders, you have taken measures to build the foundation for a
solution that is nondiscriminatory. Together, all these characteristics and approaches you have
been applying reflect a rights-based solution building process.
Beyond these, one way to ensure that any solution you build will continue to follow a rights-
based approach is to apply the AAAQ checklist. This refers to the criteria of accessibility, avail-
ability, acceptability, and quality.
Accessibility ensures that your target population will be able to reach and consume the product
or service you are creating. One subcomponent of this is affordability. Another is physical acces-
sibility, ensuring that it reaches the last mile. Durability is also included, as it will not be acces-
sible if its usability has expired by the time your target customer needs it. Availability refers to
the provision of the product or service. Acceptability refers to the social and cultural aspects that
may foster or inhibit the uptake of, and benefits from, your product or service. If you have made
it available but have not ensured that it can be accessed in a socially acceptable way, then how can
your end user benefit? Last but not least, quality is a cross-cutting component in any field of work.
For your solution to produce the social impact you are setting out to achieve, it must maintain an
optimal level of quality.
Finding this optimal level can be tricky for the social entrepreneur who is aiming to produce
the most affordable solution. Affordability is often associated with the lowest cost possible, but is
the lowest cost solution always the highest quality? It is often not. Where does one draw the line
and find the right balance between maintaining the lowest possible costs and prices and main-
taining sufficient quality to result in the desired outcome? While affordability is a component of
accessibility, so is durability, which is affected by quality. This is why applying this checklist is
so important! None of these characteristics alone will build the winning solution. Finding the
solution that provides value after taking into consideration these multiple dimensions—low-cost,
high-quality products that are durable over time—is the key to effectively tackling your social
challenge. Otherwise, you will be asking your end users to invest in a product or service that will
only perpetuate the existing status quo. We will talk more about this in the next chapter, when we
discuss the S-shaped curve and related concepts.
Values and Characteristics of Various Stakeholders

By now, if you are following these steps, you will be aware of the fact that “community” does not
refer to a homogenous block of people. Rather, each community is composed of various subgroups
and individuals representing a vast amount of diversity in values and practices. Looking around at
the community in which you are sitting today, it is likely to be composed of various ethnic groups,
potentially various socioeconomic levels, and in most cases, various age groups. In most cases,
gender analysis will also be a huge part of developing your solution.
Therefore, no matter which community you are a part of and you are operating in, take
into consideration the values, preferences, and practices of other members in your community.
Depending on which part of the world you are operating in, this may involve presenting yourself
in a certain way, following specific social protocols, and recognizing existing social hierarchies.
This includes a range of behaviors down to the way you dress and the way you greet people! Most
social challenges are cross-cutting and involve multiple subpopulations, so it’s crucial to keep in
mind that finding ways to collaborate across stakeholders is your number 1 priority. Do everything
you can to make sure that you, and others, go out of your way to demonstrate and earn each other’s
respect.
Reflective Practice
Social entrepreneurs have the tendency to charge through the planning process without stopping
for breath. Set aside a time each day for reflective practice on your own and with your starting
team. What have you learned from your community-driven research? What new insights were
gleaned from talking to the different stakeholders? Have any red flags arisen? What have been the
unexpected elements, containing surprise or confusion or even alarm, that need further investiga-
tion? More often than not, your learning path is not a clear-cut one that leads you to a predeter-
mined point. Stopping to fully ingest and digest all the information you access along the way is
crucial in incorporating it into any future solution you may develop.

On the topic of reflective practice, let’s take a moment to recap the journey we’ve described so far.
In Chapter 1, we talked about the meaning of social entrepreneurship, the differences between
social entrepreneurship and other forms of social service, and the differences between social entre-
preneurship and other forms of entrepreneurship. In Chapter 2, we focused on characterizing the
social challenge we’re setting out to tackle. What are the root causes, who are the populations
affected, and what has been attempted to date and why has it not worked? In this chapter, we
introduced the steps that a social entrepreneur can take in the process of co-creating a solution
with community members and other stakeholders.
This involves community-driven research, which can take place in the form of workshops,
conferences, round tables, door-to-door surveys, focus groups, and one-on-one interviews with
stakeholders. Stakeholder mapping is a process that helps the social entrepreneur and starting
team to identify key players influencing the success and the characteristics of any solution to be
implemented. Asset mapping is a process that helps identify key sources of knowledge and other
resources that can be leveraged toward creating and implementing the solution. By exchanging
knowledge with community members who have a firsthand experience with the problem at hand,
and experts who have technical knowledge on the problem and potential solutions, the social
entrepreneur thus acts as a facilitator in the process to build local knowledge and capacity toward
creating and implementing a solution.
These steps ensure that the community is mobilized in a participatory planning process so that
all stakeholders can have ownership of the solution and a vested interest in its success.
Exercise: Your Homework

You are only three chapters in and have already come a long way! Let’s build on the research
you conducted in the previous chapter to add your own take to the challenge characterization,
based on fresh work you’ve conducted with the community you’re addressing. The first step of co-
creating a solution is to understand the different ways that people interact with this challenge and
the different opportunities that this community provides to bring together and build on existing
resources. In this context, it’s time to prepare the following:
1. Prepare your stakeholder analysis. You have the choice of simply listing stakeholders and
adding one to two sentences next to each, describing their level of interest and influence; or
summarizing in a two-by-two table as illustrated in Figure 3.3. Note to yourself where you’d
like each stakeholder to be. What can they contribute to your solution?
2. Prepare your asset map. Again, this can be either a simple list of assets that fall within
the eight categories described, or a visual diagram summarizing them as illustrated in
Figure 3.6. Note to yourself any opportunities you’ve identified for different assets to inter-
act with each other and build on one another. How can you leverage these assets to tackle
your challenge?
3. List the sources of information behind the two analyses you’ve produced. Who are the
different people and groups you’ve met with and spoken to? Is there anyone missing? How
can you bring these people and groups together in a visioning workshop or other forum
to exchange knowledge and ideas? Make a list of steps taken, and next steps for yourself.
If and when needed, go back and adjust your stakeholder analysis and asset map as you
proceed.
4. Last but not least, write out your AAAQ checklist. What characteristics and qualities will
any solution you develop have to exhibit in order for it to be acceptable, available, and
acceptable to the community you are working with? What considerations will you need to
make in determining the optimal level of quality needed to produce your desired outcome
while ensuring these attributes?
CHAPTER SUMMARY
◾◾ The best way to start building a winning solution is by co-creating it with those most
affected by the social challenge.
◾◾ The social entrepreneur serves as connector, bringing together existing resources and
catalyzing an exchange of knowledge to start identifying potential solutions.
◾◾ A community is a social group bringing together individuals sharing one or more
things in common, whether living in the same place or sharing a common culture and
way of living.
◾◾ Community-driven research is characterized by being developed and implemented
with and by the people affected by the social challenge.
◾◾ Conducting a stakeholder analysis and asset mapping exercise will help ensure that
you are including and leveraging key players and resources.
◾◾ Using a rights-based framework means including everyone in the planning stages
without discrimination, demonstrating transparency and accountability to all stake-
holders, taking into account legal and policy frameworks, and ensuring the AAAQ
checklist.
◾◾ Remember, find the local entrepreneurs and build on their work; don’t reinvent the
wheel!
◾◾ These co-creation techniques will help you pave the path toward finding a winning
solution.
Company profile: Ciudad Saludable, www.ciudadsaludable.org.

Founded in 2002, Lima, Peru.
Product/service: Ciudad Saludable means “Healthy City” in English. Healthy City is a
nonprofit organization that strives to build inclusive, harmonious cities where all have equi-
table access to opportunities and social justice. To enable this vision, they developed a new
solid waste management model that is interdisciplinary, participatory, progressive, and inno-
vative all the while considering economic, social, and environmental impacts.
Goal: Ciudad Saludable’s mission is to contribute to the sustainable environmental manage-
ment of cities through the implementation of solid waste management systems that holisti-
cally consider the environment, the economy, and society.
How it works: Ciudad Saludable creates efficient solid waste management systems that
demonstrate how sustainability and profitability can be aligned across a variety of indus-
tries. By enabling the development of microenterprises that collect and recycle waste in
Peru, they have empowered and improved the livelihoods of waste pickers. The microen-
terprises reduce waste volume in municipal landfills and generate income by separating
and selling recyclables. Their programs are designed around the concept of sustainable
development and focus on integral public policies, equity, and sustainable management
of solid wastes.
Case Study: Ciudad Saludable

We will now examine the case example of a social enterprise that was built to tackle the challenge
of solid waste management in Lima, Peru. Like many cities in emerging or developing nations, solid
waste (what we refer to in layman’s terms as trash or garbage) is a challenge. Incomplete and inefficient
disposal and management by governments and municipalities or by private companies contracted to
do the job commonly lead to overflowing garbage containers, landfills, and unhealthy practices such
as incineration. In Lima, like in many similar settings, an informal waste management system grew
in parallel with this formal system, whereby waste pickers would scavenge through the overfilling
containers and/or dumpsites. Waste pickers commonly earn a living by collecting recyclable material
from garbage sites and selling it to a middle man or point person, who then sells it to the recycling fac-
tories. This has been documented in diverse settings around the world.* In many of these settings, the
waste pickers have come together to organize an existing community into a social business, transform-
ing themselves from scavengers to service providers.† We will examine the case of Ciudad Saludable.‡
This was a long and multifaceted process with many moving parts and players; for educational
purposes, it can be summarized and simplified into a stepwise process that could be applied in many
different settings across the world and adapted to many other social problems and sectors. The first
step was for the waste pickers to come together, to meet and discuss the challenges and opportuni-
ties they were faced with on a daily basis. To start with, their work was physically hazardous, as
they commonly used their bare hands to sort through garbage, which contained hazardous material
including broken glass, medical and industrial waste, heavy metals, toxic chemicals, and even dead
animals. The improper management of this waste resulted in environmental and public health con-
sequences in addition to the injuries and illnesses experienced by the waste pickers. The municipality
at the time was collecting less than half of the total waste dumped into garbage containers in many
neighborhoods. Waste pickers were often working alone and moving around by foot. By coming
together, they could scale their operations and find ways to make them more efficient.
Thus, the second step was the formation of a social venture to regularize and expand their
work. They took a loan from the bank and invested it in pushcarts and pickup vehicles, building
their own carts, which were attached to motorcycles. They began collecting waste at the source,
by going door to door. Clients were asked to sort their own waste, but compliance was not high
to start. Secondary sorting shelters were created for service providers to go through and sort the
collected waste again after aggregating many households. Scrap shops were then created to aggre-
gate recyclables collected by the members, selling them to the recycling factories and assuring the
members a fair price for the materials they collected.
When a waste picker works alone, he or she sells his or her collected recyclables to an interme-
diary every day, earning low prices. After organizing and creating a storage center, waste pickers
were allowed to aggregate and sell at larger volumes straight to the recycling factories, manufac-
turers, or exporters. These large businesses only accept large volumes, and they have to be clean.
Working alone, one person in one day cannot accomplish that. But by forming an association the
waste pickers—now dubbed recyclers—are able to meet these requirements.
As an example, if a kilogram of plastic is sold to an intermediary, the price earned is 0.5 sol
per kilogram.§ But if the same kilogram is sold directly to the recycling factory the price is 1.5 sol
* Example: Report on informal SWM sector in Beirut, Lebanon, pp. 75–79 (http://planbleu.org/sites/default/files/pub
lications/gestion_dechets_liban_en.pdf).
† Example: SWacH case study in Pune, India (http://no-burn.org/downloads/ZW%20Pune.pdf).
‡ www.ciudadsaludable.org.
§ 1 sol = US$0.3 at the time of writing.
per kilogram. That’s three times the revenue! Most importantly, the recyclers have gained dignity,
recognition, and protection in their work.
Other organizations have achieved similar results in different parts of the world, each with
their own business model. In Pune, India, the SWaCH cooperative collects monthly fees directly
from households, with differential pricing depending on the neighborhood, also increasing the
daily income of each recycler by threefold on average.* In Malang, Indonesia, a social enterprise
founded by medical students invites people to bring in their recyclables in exchange for healthcare
insurance rather than cash.† And these are just a few examples; there are many others.‡
What are the business practices that allowed them to attain these achievements? Investing in
equipment allowed them to increase in efficiency and volume. The sorting shelters and scrap shops
built a supply chain to connect the service providers from the source (households) to the recycling
factories. Customer service practices were also implemented: members wore uniforms, ensured
punctuality, and learned to professionalize their appearance and their interaction with clients.
In summary, their profit margins increased because they were able to introduce new components
along the value chain, which enabled them to aggregate their individual production levels.
The driving factor behind this group’s ability to foster success and sustainability was their
community-based approach (see interview with Albina Ruiz, founder and CEO). Starting with the
people affected by this problem, and empowering them to be part of the solution and reap the ben-
efits on multiple fronts, was the core factor for success. This came hand in hand with the involvement
of various stakeholders, from the consumers to the municipality. Finally, building the social enterprise
one step at a time, from community-based research to stakeholder analysis to incorporating available
assets to adding different components and best practices, allowed the group to co-create a sustainable,
viable, and thriving new community-based venture.
Conclusions
The co-creation process is not a start-and-end procedure, but rather an ongoing approach that will
characterize the formulation, development, implementation, and growth of your social venture.
Involving your target audience and other stakeholders from the start, identifying and incorporat-
ing local capacities and other assets, and engaging the community in creating an action and learn-
ing plan are all part of ensuring that your solution is effective, viable, and scalable. Key principles
to adhere to are creating a shared vision, managing expectations, preparing adequately by assess-
ing your capabilities, and understanding your partners and key players. Establishing processes
and building the framework for information sharing will pave the path for the transparency and
accountability that is essential for you to maintain this sense of ownership for your stakeholders.
Continuous communication and immersion are essential. Most importantly, collecting and con-
stantly reflecting on data and information will ensure that you do not miss out on opportunities
to fill the gaps that have been overlooked or simply not linked together in the past. Thus, you will
effectively fulfill your role as the connector. In the next chapter, we will expand on ideas and tools
to help you refine and test the design of your product or service and develop your theory of change
to link this design to the social change you seek.
* SWaCH case study, available at http://no-burn.org/downloads/ZW%20Pune.pdf.

† Garbage Clinical Insurance, see https://www.facebook.com/pages/Indonesia-Medika/194273577406528.
‡ Example: nine case studies: http://www.no-burn.org/downloads/On%20the%20Road%20to%20Zero%20
Waste.pdf.
Chapter 4
Designing Your Solution
Co-creating with the community is not a finite step that’s completed and moved on from. It’s a
continuous way of doing things, and the tools and methods we learned about in Chapter 3 are just
the start. Now that you’ve initiated your community-driven research, stakeholder analysis, asset
mapping, and other key steps, it’s time to zoom in on the design aspect. How can you design your
solution to fulfill all of the attributes you’ve identified in the last chapter?
Now that you have a sense of these basic attributes, it is time to put them all together into a
product, service, or system that will change the way people interact with your social challenge.
You’ve developed an in-depth understanding of your stakeholders, and now the time has come to
decide who your end user will be, how you’re going to build this solution around them and their
needs, and how to ensure that the solution you’re building will indeed tie back to the social chal-
lenge you’re setting out to tackle. Get ready to hack this challenge!
In this chapter, you’ll learn about innovation and design tools and methods used by leading
organizations, from nonprofits to Fortune 500 companies, working to develop cutting-edge prod-
ucts and services. When most people think of the word design, they think of the fine arts, graphic
design, or the fields of architecture, urban design, or interior design. Many people do not know
that organizations working on sustainable development have “designers” in them. These people
work to design a wide range of programs and products from poverty alleviation interventions to
consumer products with environmental solutions.
This chapter will be divided into three key areas. The first will focus on design and innova-
tion, sharing tools and techniques to generate ideas based on the information you gathered in your
research phases. The second introduces the theory of change, a crucial planning tool that helps
ensure that you effectively design your venture around the challenge and end user you’ve identi-
fied, test your assumptions, and communicate clearly the connection between your solution and
the problem. The third walks through a case study of design for affordability, quality, and scale,
providing an example of a social entrepreneur who developed a venture that effectively tackles a
social challenge and is innovative, scalable, and financially sustainable.
63
Levels of Innovation
At this stage, you are focused mostly on formulating the solution in terms of how you are going to
come up with the actual product, service, system, or process that you will use to change the social
challenge. But it’s important to point out that this is only one level of innovation! Innovation is not
a step, or something that happens during only one stage of the process. Innovation means finding
new ways of doing things, and this is something a social entrepreneur applies each and every step
of the way! Right now, we’ll talk more about innovation in designing your solution, and in future
chapters, we’ll talk about innovation in building your business model, building your operations,
building your distribution systems, and many other aspects which will help you create the largest
social impact possible (Table 4.1).
Failing Is Part of the Process

Rule number 1, don’t be afraid to fail! If you are truly going to embrace innovation at every step of
the process and create a social venture that knocks your social challenge out of this world, you can-
not be afraid to fail. The only way it is even possible to create something new is to try something
different—and 9 out of 10 times, you will fail! So be brave, put your pride away, and make sure
everyone on your team does the same.
Table 4.1 Levels of Innovation

Level Description
Product or The product or service itself contains elements that have not been applied
service to this social challenge before and that increase the effectiveness by which
this product meets the challenge.
• Examples are designs that make a product more affordable, more
durable, more tailored to the target audience, or more effective in
producing the desired change.
Business The enterprise has created financial viability through a business model that
model has yet to be employed in addressing this challenge, mobilizing resources
that have not yet been leveraged.
• Examples are creating multiple resources streams, differential pricing,
combining different funding sources or vehicles, identifying new
untapped resources.
Distribution The product, service, or system penetrates the target market through
(external) distribution channels that have yet to be achieved and that allow the
product to reach the most underserved.
• Examples are supply chain innovations; creating a market of providers,
transporters, manufacturers, retailers; creating social impact through
their provision, not just the customers.
Operations The social venture employs processes that allow it to deliver the highest
(internal) social impact possible at the lowest cost, in a way that will allow it to scale.
• Examples are setting up internal systems and processes to increase
efficiencies, setting up innovative monitoring and evaluation systems,
and creating effective feedback loops.
Designing Your Solution ◾ 65
Tangible progress does not always mean success—it also means failures and lessons learned.
It means you tried something, worked toward something, and put everything you have into mak-
ing it succeed. You need to share those stories too, as they will help others build on your trials.
Expect to fail; it is part of the process, and remember, each and every failure is one step closer to
success.
Each and every failure is one step closer to success.
Innovation and Design

User Driven Design
As a continuum of the co-creation process, developing the solution centers around the end user.
Designing around the end user is not only the recommended approach in social entrepreneurship
but in developing any product or service in the commercial world. Software is designed in a way
that makes it “user friendly.” Refrigerators, baby strollers, video games, bikes, and clothes are all
designed to meet the needs and preferences of their target audience. It is this type of thinking that
you want to internalize as you develop your solution.
The first question you need to ask yourself is: Who am I designing this for, and with? Now
that you’re familiar with the various segments in the population that are most affected by this
challenge, which one are you targeting? As illustrated by the previous examples of commercial
products, no product can serve everyone. You need to tailor it around and build it with your end
user. This needs to be one segment of the population whom you are focusing on for now. If you
want to reach multiple segments, then you’ll probably need to design multiple products, services,
or systems to reach each one. Remember, there are no one-size-fits-all problems, so it’s not likely
you’ll find a one-size-fits-all solution.
User-centered design refers to the process through which products, services, and systems are cre-
ated for and around people’s needs. This has been used in government, law, health, education, con-
sumer products, community services, and many other fields. It starts with the characteristics, needs,
and preferences of the end user and builds around that. You are taking this one step further by
building your solution with the user, and this is why we refer to it as user-driven design (Figure 4.1).
User Driven = Data Driven

Remember a couple of chapters back when we said data is power? Well guess what—by now you
will have collected quite a lot of your own data! All the steps you’ve taken have provided you with
data to inform your design—from talking to different stakeholders, to immersing yourself in the
community, to building and exchanging knowledge on the preferences, experiences, and needs of
the different segments of the population. How can you now use these as data to inform the design
of your solution?
Your collective experience forms the basis of your user-driven solution.

Identify
need
Specify
context
of use
Evaluate System Specify

designs satisfies requirements
Product
design
solutions
Figure 4.1 User centered-design. This is an example of how user-centered design is applied
across sectors—believe it or not, the source of this diagram is a government website dedicated
to improving user experience with government, like understanding and accessing healthcare in
America! (From http://www.usability.gov/what-and-why/user-centered-design.html.)
Leaders in the field of social entrepreneurship, public heath, and other population-based fields
often debate the issue of individual stories and anecdotes versus population data. While individual
stories are powerful in conveying the human experience, population scientists, funders, and other
players often voice the concern that individual stories do not provide a complete picture and some-
times can be biased. This is why so much effort and resources are put into gathering representative
data at the population level.
However, when used collectively, stories from the field can also be a powerful tool for you to
use in designing your intervention. If you have taken all steps necessary to ensure that all segments
of the population you are working with have been represented, then their joint voices can paint a
picture for you of the landscape you are operating in. Your collective experience forms the basis of
your user-driven solution.
One note of caution to consider is that giving different people equal opportunity to share
their stories does not necessarily mean they will equally execute on that opportunity. Social and
cultural divides and dynamics may inhibit some individuals and groups—whether due to gender,
age, social strata, and other complex factors—from voicing their experiences in the same way that
others might. You will be more likely to gain a sense of these dynamics and variations by working
with members of the community who represent these different subpopulations and who can help
you not only extract but also interpret and weight the different stories.
You can even assign different degrees of uncertainty to each population segment, to carry
forward in developing your product or service, and to test at every opportunity. By maintaining
this awareness of the nuances in the community you are serving, you can increase your likelihood
of ensuring that your product or service will sufficiently penetrate existing gaps to fill the needs
of your end users.
Generating Ideas, Models, and Solutions

How can we move forward from the current state of the challenge we’ve described and understood
in this community to envisioning future possibilities? Solutions may be possibilities that are imple-
mented within the current framework and infrastructure of the society you are operating in or that
may require disrupting the current framework and building completely new systems.
Full Immersion
Generating ideas, models, and solutions is not something you can do most optimally or effec-
tively while sitting at your desk at home or in a university or office building. Identifying oppor-
tunities requires a blend of group dynamics and reflective practice, as we discussed in the last
chapter. Immerse yourself and your collaborators in the middle of the social challenge you are
tackling! If it is improving healthcare, you need to spend time on the frontline of healthcare
delivery, working to provide access to your target population and experiencing firsthand the
barriers to access, quality, and reach. If it is improving education, you need to be engaged in a
learning institution or other organization working to increase access and quality of education.
This could be as simple as being a tutoring volunteer. The important thing is you need to be right
in the middle of the situation you are trying to improve, not observing it from the outside and
designing potential solutions there.
Blended Perspectives
Try to include various perspectives such as those who have been working on this topic for a long
time versus those who are fresh to the topic. This latter point may surprise you, but it is often those
who approach a challenge with a fresh new perspective who are the most able to question existing
assumptions. It may be daunting to find the right balance between working with experts and chal-
lenging existing ways of doing things—at the end of the day, your key out of that conundrum is
realizing that the number 1 expert is your end user, and the only way you will learn whether a new
way of doing things might work is to first think outside the box and then test it out with the user.
Experiment with Different Ideas

During the design phase, you’ll have to get comfortable with disorder, as you turn everything inside
out to generate different ideas and formulate your solution. You might end up with something
completely different from what you started out with, but we’ll make sure you tie it all back to your
challenge using the theory of change tool later on in this chapter. For now, embrace the unknown!
Let’s start with a few basic principles that others have tried in various fields. Get together with
your team and your end users and brainstorm different options. Build on each others’ ideas and try
out different scenarios! Multiple models and versions of ideas are generated as you try out different
things through iterative brainstorming and prototyping.
Brainstorming means generating ideas—literally like a storm in your brain, with lightning,
thunder, and disruption! First, you immerse yourself, reflect deeply, and build your understanding
of the challenge—and then you let your brain cells loose to attack it! This is the exploratory stage
of idea generation. No idea is too big or too small, and none are discarded just yet. Brainstorming
is done best in multiple stages—on your own, with your starting team, with your community and
other stakeholders. After this exploratory phase, a few ideas are selected to move forward with
based on stakeholders’ feedback. Prototyping means developing “practice runs” of the initial ver-
sions of your solution that you can test and iterate until you hit the home run.
Ask the Right Questions

This is the time when you compile all the data and insights you’ve gathered from the field. What
have people told you they need and want? What would you need and want if you were in their
shoes? Trying out different ideas is a part of the co-creation process; it’s not something to be
intimidated about. Kick off the brainstorming and prototyping with questions that will help plant
seeds of ideas that will snowball and grow as you proceed. Ask yourself and your team, “What
would it look like if…?” or “How would I…?” Start your discussion with “Let’s imagine…” or “I
want to…” Don’t forget to keep applying the basic principles you’ve been using from the start,
when you first set out to tackle this challenge. Think like a child, question all assumptions, and
ask “why?” and—more importantly—“why not?” Let your creative juices flow, shake things up,
and let your imagination run wild! Remember, the sky’s the limit.
Brainstorming Rules
This type of brainstorming and questioning will keep happening at various stages down the road,
not just during the design stage. So get comfortable with chaos! When brainstorming, there is no
need to determine whether an idea holds promise, is feasible, or might work. It is simply a way of
reaching into your own brain and seeing what you can find. Simple ways of brainstorming include
sitting around a blackboard, flipchart, or piece of paper and sharing ideas. Group energy allows
you to build on others’ ideas or propose the complete opposite of others’ ideas or to generate mul-
tiple ideas of your own! It is important to create a safe space: do not criticize or discuss the differ-
ent ideas, simply note them and return to them later. No idea is too big or too small—encourage
everyone to contribute thoughts, which may at first seem random but more likely than not will
lead to others—this is how you explore different parts of your brain that have been awakened by
the co-creation process in this whole time.
Check out the brainstorming rules posted on the wall at the Hippocampus Learning Centers
in Bangalore, India, which we’ll read more about in the case study at the end of this chapter
(Figure 4.2).
Deep Reflection vs. Group Dynamics for Design

In the last chapter, we also talked about the importance of reflective practice and daily debriefings.
In the design stage, you want to continue to build on both of these. Deep thinking is required to
dig out innovative ideas from your brain! Encourage each and every member of your design team
to spend time reflecting calmly on a daily basis out in the field and back home after information
collecting excursions. Time in solitude allows one to explore thoughts, stories, and observations
stored in various parts of one’s mind. Record your observations from the field and review them,
noticing patterns and noting down your questions. This will allow you to synthesize the informa-
tion you’ve collected, which builds the foundation for you to generate solutions.
Once you’ve spent time in silent reflection and/or small-group discussion, report back to the
larger group of stakeholders with these insights. This will help you create a catalytic space to
build on each other’s ideas, and do this sequentially and cyclically until you have generated new
insights, ideas, and solutions together. The surest way to make progress that is long lasting is to
Figure 4.2 “Idea killers” to avoid—posted on the wall of HLC’s headquarters (see case).
(Poster from the book: Creativity in Business by Igor Byttebier and Ramon Vullings. Free down-
load available at http://www.ideakillers.net.)
inch forward, one step at a time. By iterating back and forth and combining these approaches,
you’ll be able to leverage the power of deep reflection and build on it with the power of group
dynamics.
The surest way to make progress that is long lasting is to inch forward, one step at a time.
Tips and Tricks to Try

When you first start, you’ll inevitably feel optimistic that you are going to find a solution. You’ll
try out a few things, brainstorm and prototype and test and iterate, and the solution might start
to solidify. Other times, it might start to feel even more and more elusive and beyond your reach.
This is not where you give up. This is a familiar feeling to every social entrepreneur. Know that
the mere fact you are feeling this way means you are deeply immersed in the process and this is
actually, literally a step in the right direction.
When it feels like nothing is working and you have run out of ideas, try a few fun exercises:
◾◾ Reframe: Change the way you’re framing the challenge. Are you imposing restrictions on
yourself by surrounding your topic with a set of predetermined assumptions? Are you associ-
ating certain features of your checklist with qualities that they may not necessarily be associ-
ated with? What would you create if this feature was not an issue? If you’re getting stuck,
try that first and then see what new ideas might come up along the way. You can always go
back and adapt later, this is just a way to temporarily remove different restrictions that could
be blocking different ideas!
◾◾ Reposition: To help get a new perspective, try looking at it from a different angle—literally,
try changing your mental and physical positioning. Maybe you need to step back at this
point and see the forest from the trees or, vice versa, zoom in on one particular aspect and
see it up close in a way that you never have before. Have you experienced the challenge from
different perspectives? Try shadowing people who might be interacting with it in a way that
you haven’t yet considered. Try asking others to propose solutions to you, and you can test
them out! Being on the receiving end puts you in a completely different position and that
might give you a whole set of fresh ideas.
◾◾ Ask yourself what you could possibly do to make it worse: this is another way of looking
at things from a different point of view. Can you invent a way to make this social outcome
go in the opposite direction from where you’re trying to get it? What would it take? Many
creative teams in innovative organizations conduct a “premortem” on a challenge: rather
than asking what success would look like, they ask what it would look like to not deliver
this solution. Identifying the trigger points that will take the social outcome the wrong way
might help give you ideas on how you could do things differently and reverse those trigger
points.
◾◾ Break it down into smaller mini-challenges: It might help to break down the challenge
into multiple aspects, rather than tackle it as one giant intangible topic. What are the dif-
ferent aspects that have emerged as opportunities for improvement during the co-creation
process? How might you tackle each aspect separately, before putting them back together
again? This might help you get a fresh insight into multiple opportunities, which you can
then combine into one product or service. Thinking about it in a different way, examining
different parts of the problem can help plant seeds of ideas, which will lead you to the solu-
tion you’re looking for. Don’t forget, it might be completely different from what you start
out to create!
Don’t rush the design phase. After all, you’re creating the solution here that you’ll spend the
remainder of your venture building systems around. You’ll keep innovating right through the
business model, delivery model, organizational aspects, and growth. But before you start, make
sure you’re not rushing into things until your solution is ready. Focus on creating the best pos-
sible product or service for your end user. Most of the time, it will be something painfully simple.
Once you’ve conceived it, you might not even be able to wrap your head around the fact that this
is something that didn’t exist before you started!
Give yourself as much time as needed for this stage. If you don’t feel satisfied with what you’ve
come up with yet, check out the resources in Boxes 4.1 and 4.2 to explore further possibilities,
thought questions, and design methods to push your creative boundaries even further than you
thought possible.
BOX 4.1 TIPS FOR USER-DRIVEN DESIGN

1. Learn everything you can about the situation and the people it affects. Immerse your-
self by playing a part in the existing system or supply chain, either as a provider or end
user.
2. Recruit others to design with you—You cannot do this alone. Make sure to include
both experts from the field, who have been working on this topic for a long time, and
newcomers with fresh ideas and perspectives.
óRemember that the number 1 expert is your end user.ó
3. Leverage both the power of deep reflection and the power of group dynamics. Both on
your own and with your design team, ask questions like “why?” and “why not?” Start
sentences with “Let’s imagine…” “How might we…” “What might work?” “I want
to…”
4. Think outside the box and don’t disregard ideas that might sound crazy (even if people
tell you that your idea is crazy—You won’t know if it works until you test it)!
5. Test out your ideas with your end user. This will require you to prototype them. Many
designers use a rapid-prototyping method to test out multiple ideas before developing
a more focused set of prototypes to test in the field.
BOX 4.2 POPULAR RESOURCES

For further ideas and inspiration, check out these popular tools and courses, which are freely
available online:
www.designkit.org
plusacumen.org/courses/hcd-for-social-innovation
itunes.apple.com/us/course/creative-listening-with-ideo/id886724883
https://hbr.org/2013/11/three-creativity-challenges-from-ideos-leaders
www.ted.com/talks/david_kelley_how_to_build_your_creative_confidence
Who Is Your Design Team?

In the last chapter, we talked about assembling your starting team, those who would head out into the
field with you and engage in the co-creation process with you. To that starting team, you then added
various stakeholders as you got to know the community. Now, let’s take a step back to ask yourself:
is your starting team the same as your design team? Is there anyone missing? Do you want to recruit
specialized people based on the information and needs you have gathered? By now, you might have
started formulating some preliminary ideas on what your solution will look like. For example, is it
likely to involve specialized subject areas such as coding or manufacturing, or is it likely to involve
training a new service corps and setting up a new service system? In some cases, the answer could be
more than one of these—or something entirely different! As you proceed, make sure you start think-
ing about who you might want to add to your team. Also, at certain points in the process, you might
want to break up into smaller more specialized groups to tackle certain steps in more depth.
Building Your Solution

Analyzing and Organizing Your Options
At some point, the sheer number of ideas generated becomes overwhelming. This is where you
allow yourself to step back and apply your own judgment and the judgment of your team members
and stakeholders to different ideas. Your research in the field is the key driver that will inform your
process of taking forward different options. Think back to what others have tried, what’s worked
and what hasn’t (and why or why not), what your end users have taught you about the way they
experience the social challenge, and the different resources available to them and to you. This is
where you really need to engage your stakeholders in assessing the feasibility, desirability, and
potential of various options. Some ideas are simply stepping stones to reach your solution and can
be eliminated from the pool. Once you’ve narrowed it down to a manageable number of potential
models, you can prototype them and test them out, in order to gather data to inform the solution
you will be building your social venture around. Remember, at the end of the day, the solution
you are looking for is the one that was generated by the end users—what did they tell you, what is
their experience, what are their needs and preferences?
Prototyping
Think of prototyping as a step that allows you to communicate your idea in a more tangible way
in order to test the concept and gather feedback. It’s also an exercise for you to develop your ideas
further by solidifying them into something concrete—whether a physical object to serve as a
model for your product or a diagram to chart out your service or system. Rapid prototyping is a
useful tool to help you use existing resources and information to put together a sample model of
your solution. Rapid prototyping is an iterative way of generating multiple sequential models, each
incrementally building on and improving the previous.* Try rapid prototyping with your team
and see what ideas you generate (or discard)!
Even if your solution is a process or system rather than an object, you can still prototype it
using the same concepts and methodologies. Let’s use the example of a new framework for a hos-
pital waiting room to better triage patients and reduce waiting times in emergency settings. You
can start prototyping it by writing out the framework, hanging it on the wall, and going through a
series of tests whereby various stakeholders are asked to go through the procedure as if they are in
a waiting room and give you feedback. Ask your testers not only about their use of your model but
also about the supply chain on either end: what transportation did they use to get here, how long
did it take, did they have to leave their work, how much are they willing to pay for this service,
would they come back for a follow-up, what concerns do they have about the clinical staff they are
interacting with, what information do they wish you would provide them with before, during, and
after the emergency room experience?
Test your model with both prospective patients and prospective service providers, such as in
this case, clinical and administrative staff. Give them multiple options to test out, in order to cre-
ate the opportunity for comparing and contrasting. Think of it like administering a survey—you
want to benefit from answers given by both open-ended and multiple-choice questions.
* A fun example on the use of rapid prototyping from the commercial sector is the following TED-ed talk (thanks
to Catlin Powers for suggesting this): http://ed.ted.com/lessons/rapid-prototyping-google-glass-tom-chi.
Prototyping your model is a useful exercise after you have undergone community-driven
research and collected a variety of ideas for your solution: obviously, you’ll need to test more than
one idea! Brainstorm with your team about the various options, and don’t build your solution
based only on ideas on paper. Create models and test them out, and most likely your solution will
integrate components from multiple ideas and prototypes that you’ve tested.
Testing
Test, Test, Test! Test It ‘til You Break It
Testing your prototypes with your end users in a cyclical fashion (model it, test it, and model it
again) through an iterative process is how you will get from challenge to idea to solution. “Tried
and tested” is the only way your product or service will work in the real world. This is referred to
as establishing proof of concept.
Multiple stages of testing include (1) gathering feedback on your experimental prototypes,
(2) developing multiple versions and testing them as you get closer and closer to your end product,
and (3) pilot testing your end product before attempting to build an organization around it and scale
it. Gathering feedback on your experimental prototypes is part of the iterative process of selecting
and developing your winning ideas by testing them out on your end users! Prototypes are representa-
tions of your idea that are not completely developed. As you collect initial feedback, you will start
generating the first version of the fully developed product or service, such that you could potentially
introduce it to the market. Even then, you will want to go back and collect feedback on the fully
developed version, which will likely result in a second, third, or multiple versions (Figure 4.3).
A pilot can be one small cluster of end users (such as one school, one hospital, or one village,
depending on your venture) or a small number of clusters.
Spin out
the winning
model!
Model it
Build
better
model Test it
Test it Model it
again! again
Figure 4.3 Iterative prototyping.

Piloting Your Product

Once your feedback is largely positive and user comments have been incorporated over several
cycles, you will have a marketable product or service. When you reach this stage, it is rarely advis-
able to roll out your product or service before piloting it. A pilot can be thought of as a “test run”
of your final product or service. This will inform the processes, people, and value chain around the
product or service. Customer service, transportation, storage, dealing with emergencies, and unex-
pected situations are all part of delivering (as opposed to developing) your solution. These multiple
moving parts are referred to as your supply chain. A pilot can be one small cluster of end users (such
as one school, one hospital, or one village, depending on your venture) or a small number of clusters.
An example of the value of testing can be learned from D-REV, a nonprofit product develop-
ment company whose mission is to improve the health and incomes of people living on less than
$4 per day.* After gathering information on the social problem at hand, D-REV generates various
conceptual solutions and then dives into several rounds of rapid prototyping, assembling various
iterations of their product and collecting feedback from users. In the case of their newborn health
product “Brilliance,”† the team collected feedback from various stakeholders along their supply
chain, including procurement officers (people responsible for purchasing products in a hospital),
maintenance officers (who will need to address the situation when a product breaks down or the
end user experiences difficulty applying it), and healthcare officers (doctors, nurses, and other
medical practitioners responsible for applying it). In this case, an interesting twist is that while
the end user is the healthcare provider, the target beneficiary is newborn babies. Therefore, the
medical needs of the target beneficiary informed the development of the product initially, but
the characteristics of the end user and the environment in which she operates were key to further
refining and delivering the product.
Interview Box. Umesh Malhotra, Founder and CEO,

Hippocampus Learning Centers, Karnataka, India
TC: Tell us how you pilot tested Hippocampus Learning Centers.

UM: The question was not are we piloting to see if it works. It has
to work. The pilot was to make sure it worked at scale. We had
to break it—do enough scale that you can’t manage—that’s
how you build it. Then you steady the ship and demonstrate
the basic ingredients of scale.
TC: How did you phase this out over time?
UM: Year 1, we piloted 17 centers; year 2, went up to 78. Then
in year 3, we introduced new processes, pushed the teachers
to see what would make them leave, what are characteristics we need for teachers to
have, to develop our selection criteria. Finally, in year 4, we can demonstrate profit by
increasing the average enrollment per center.
TC: What elements did you innovate, and how did you find out what works?
* http://d-rev.org/.
† http://d-rev.org/projects/newborn-health/.
UM: To start with, the educational curriculum is nothing superior to what traditional
NGOs are already using; it’s just been simplified and designed in a way so that it can
be standardized and scaled. The management is also streamlined. A core factor that
drives results for us is that the teacher is the boss of the classroom. We don’t want to
impose an external interaction.
TC: What are some other design elements that you had to test before scaling?
UM: Curriculum length, monitoring and evaluation frequency, and the rate of growth and
expansion. We had to ask ourselves, what is the lowest cost that can deliver quality?
This is a dollar-a-day situation here; families in these villages earn, on average, $100 per
month and have more than one child. We assessed price over time and went up from
charging $2 per month to more than three, which was an 80% increase and the kids
didn’t drop out. The government provides free daycare for 1–6 year olds with milk and
lunch, but villages are still asking for our preschools.
TC: What external factors did you need to take into consideration in designing for scale?
UM: The main external factor we realized early on is that we’ll never reach our end goal
through our work alone. We partner with as many stakeholders as possible: govern-
ment, NGOs, many schools, libraries, and teachers. We provide our curriculum to
other organizations to apply in other states. If you want to reach 150 million children,
you can’t work alone.
Photo courtesy of Hippocampus Learning Centers.
Designing a System around Your Product or Service

Results from testing your product or service will most likely point to the need for building multiple
systems around it. In the commercial space, we see companies building an entire world for their
consumer, selling not only a mobile phone but also the apps, accessories, chargers, technicians, soft-
ware, and complementary products such as tablets and computers with the same software, drawing
in the customer for the long-term and penetrating the customer’s life to the deepest and widest
reach possible. In social business, this has been exemplified by the Grameen group, who added one
component after the other to the design of their interventions. What started as a social fund for
women to increase their access to financial tools grew into a group of organizations to increase their
access to healthcare, education, and other social goods. As a simple starting point, the women in
each lending group were also provided with health awareness seminars and support to enroll their
children in school, as part of the group benefits that came along with accessing the microloans.
In the case of D-REV, after finalizing the design, they partnered with a well-known local manu-
facturer of neonatal medical equipment, which allowed them to leverage an existing distribution net-
work and piggyback on the existing customers, in addition to accessing data on key customer needs
and markets. The manufacturer already had access to hospitals and healthcare practitioners through
its existing products, so D-REV was able to integrate itself into an existing system, in addition to
expanding the market and sales for the manufacturer. In the case of HLC, the system included an
array of products and services to complement the core curriculum offered by the early learning cen-
ters, which allowed them to build a pipeline of customers at various stages of the life cycle.
So once you’ve prototyped your solution and are testing it, think about what systems could go
along with it to support and amplify its delivery and its impact!
BOX 4.3 ELEMENTS OF DESIGN FOR AFFORDABILITY

(Extracts from Out of Poverty by Paul Pollack*)
1. Go to where the action is, talk to the people living with this challenge, listen to them
and learn everything there is to know about the specific context
2. If you come up with a solution to a problem, there is no reason to be modest
Be ambitious!
3. Think like a child (to find the obvious solutions)
4. See and do the obvious (immerse yourself in the problem)
5. If somebody already invented it, you don’t have to
* Pollack, P. (2009). Out of Poverty. Berrett-Koehler Publishers.
BOX 4.4 COMMON FEATURES OF INITIATIVES

THAT HAVE TACKLED EXTREME POVERTY*
1. Listening to customers and understanding the specific context of their lives

2. Design and implement extremely affordable technologies or business models
3. Market-based solutions whose implementation is driven/supported by the private sector
4. Last mile distribution while maintaining low costs succeeds through decentralization
5. Design for scale from the start
* Warwick, M., & Pollack, P. (2013). The Business Solution to Poverty. Berrett-Koehler Publishers.
Beyond Design
Design is only one aspect of innovation, and innovation is only one aspect of social entrepreneur-
ship. When developing your solution, it is critical to stay focused on the core challenge you are
tackling and the community you are co-creating it with. You will cycle back to various stages
of innovation and design as you begin to grow and implement your solution, but the challenge
and community will remain at its core. A few rules to keep in mind were well summarized by
Paul Pollack, the founder of International Development Enterprises, which creates income and
livelihood opportunities for poor rural households by designing and delivering technologies for
improved agriculture, sanitation, and hygiene.* In his two books Out of Poverty and The Business
Solution to Poverty with Mel Warwick, Pollack presents a commonly understood framework syn-
thesizing best practices from his own experience, which reflect and mirror also a multitude of
success stories from development ventures worldwide (Boxes 4.3 and 4.4).
These common principles emphasize extreme affordability, but it is important to remember
that this only pertains to the extent that it fulfills your central mission. Sometimes, the lowest-cost
* http://www.ideorg.org/.
Income today
Income tomorrow
Figure 4.4 Poverty trap.
option is not that which will allow your customers to escape poverty. This was pointed out by Dr.
Catlin Powers, cofounder of One Earth Designs. “Why would I ever buy a lead shoe?” she was
asked by one of her field testers, pointing to the fact that a lead shoe may be more affordable than a
lightweight shoe but would defeat the purpose of increasing mobility, the driving mission behind
making shoes! One Earth Designs manufactures and distributes solar-powered cook stoves, origi-
nally designed for nomadic communities.* If the cook stove is designed for extreme affordability
but is not lightweight and is not durable, then the social enterprise would be defeating its purpose.
This points to a new definition of affordability, incorporating not only the dollar cost of the prod-
uct but also the opportunity cost of failing to deliver on your mission.
This is elaborated in the S-shaped curve of poverty as taught by Professors Banerjee and Duflo
at MIT’s Poverty Action Lab (Figure 4.4).† The S-shaped curve represents the observations that
living in extreme poverty lends itself to behavioral economics that propagate poverty, thus creating
a poverty trap. Buying the cheapest product (in this hypothetical anecdote a pair of lead shoes)
rather than the most effective or most durable product is one way in which household poverty is
often perpetuated, since the purchase will have to be made over and over again. This underscores
the importance of studying your social challenge and learning everything there is to know about
your community, their lifestyle, and the way they make their decisions. It also emphasizes the
need to be able to frame the design of your product within a theory of change that connects it to
the challenge you are tackling and the impact you aim to create for your end users, specifying the
assumptions underlying each step along the way.
Design is only one aspect of innovation, and innovation is only one aspect of social
entrepreneurship.
* www.onearthdesigns.org.
† Banerjee, A., & Duflo, E. (2012). Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. Public
Affairs.
Your Theory of Change

As you narrow down to the winning prototype, honing and refining it through multiple testing,
you also want to make sure you have a bulletproof, tried and tested explanation on how your solu-
tion will change the social challenge you are facing! This is what we call your theory of change. Is
this prototype going to address the social challenge you are aiming to meet, or is it going to be a
pair of lead shoes? The theory of change is the explanation and justification for why you are about
to embark on this social venture you are planning, why it will work, and why people should join
you and invest resources in your solution. It is the essence behind the design of the solution, which
will bridge the gap between the challenge you have characterized and the measurable change you
are aiming to achieve.
So what is your theory of change? So far, along this journey, you have started with the chal-
lenge you’re tackling and are building your solution toward that end. Spending time developing
and testing your theory of change at this point will help make sure that you are truly developing
your solution in a way that will create the change you want to see.
How can you match your design to a set of targets you want to reach? A good way to start
thinking about your targets is to start by describing the current state of the challenge you are tack-
ling, then describe how you would like to see it. How far toward that ideal scenario do you think
you can reach with your solution?
Your target will be based on certain assumptions. Let’s say you are working to reduce prevent-
able infant deaths in your community. If your intervention is a medical device, then your target
will be influenced by factors such as the clinical efficacy of the device, the health system in which
it will be applied, the human resources, and the capacity of clinical staff to apply it. If your inter-
vention is based on sociobehavioral changes such as the responsiveness of mothers to text messages
reminding them of vaccination appointments for their children, then your target will be based on
mobile penetration rates, literacy rates, psychosocial factors influencing the efficacy of receiving
such reminders, and barriers to response such as transportation and work or family schedules.
Gender patterns may also influence the impact of such reminders in settings where there may be
one mobile phone per household, which is not always with the mother.
See where we’re going with this?
You could be designing, innovating, and prototyping with the best of intentions, only to find
out that your solution fails the test.
This is why clarifying your assumptions from the start is crucial—they will inform your target
and will help you determine what steps you need to take to reach there.
What design features can optimize the sociobehavioral response in the previous example, given
what you know about the end users? Going back to the medical device example, what features
can be optimized to increase clinical efficacy, make it user friendly for the staff you’re relying on
to apply it, and make it feasible to implement within the health system it will be applied in? These
may include language options, use of layman’s terms rather than medical jargon, use of graphics
and images, and other options that increase the user-friendliness.
So, where your theory of change comes into play is in determining how the solution you are
developing will meet the needs of your target audience in the setting you are operating in. Stating
your assumptions at every step will help you evaluate whether you are designing your solution
optimally. Specifying the assumptions allows you to test them and determine whether your theory
holds! The theory of change is a concept used most often in the nonprofit world but is applicable
to for-profit social ventures too.
Tools to Develop Your Theory of Change

Your theory of change can be as simple as a few paragraphs of narrative outlining the key pieces of
information described previously. You can also turn to a number of interactive tools to help you and
your team brainstorm, discuss, build, and strengthen your theory. Many larger organizations use
diagrams to map their theory of change and represent the multiple players involved. Others try to
summarize their theory in an “if, then” sentence. “If we provide a rigorous yet simplified curriculum
charging low prices within walking distance, then we can improve educational outcomes in young
children in rural India.”
To help you get there, one of the most basic tools is the theory of change table. This is simply a
series of columns and rows that walks the user through the different pieces of the theory of change
puzzle. Once you’ve described the challenge you’re tackling and the changes you’re setting out to
create with your solution, this tool helps fill in the steps needed to get from one to the other. You
can fill it out in whichever order makes sense to you, then go back and revisit each column to make
sure it fits in with the rest (see Figure 4.5). Many social entrepreneurs start by filling in the first
column, which specifies the challenge they’re trying to tackle, and listing underneath it the key
assumptions and data points available to them regarding the challenge they’ve identified. It might
help to then pencil in the last column, which specifies the long-term change you’re setting as your
goal. Then, keep your eye on this last column as you go back and fill in the steps to reach there.
Moving to the second column to the right of the problem: who is your target audience? Who
does the problem affect, and which segment(s) of the population does your solution serve? Again,
list underneath the key assumptions about this population. The testing that you put your pro-
totypes will inform these assumptions. Have you explored the barriers between you and your
audience? Are you assuming that they will be open to and interested in adopting your solution?
If you are sending text message reminders to mothers to bring in their children for vaccination,
you are assuming that (a) the mother has access to the mobile telephone number recorded in her
file (oftentimes, the father receives the message and does not relay it to the mother), (b) she is able
to read and understand the message, (c) she is physically and logistically able to respond to it and
Problem Audience and Steps needed Measurable Wider benefits and

entrypoint to bring change effects long term change
Assumptions: Assumptions: Assumptions: Assumptions: Assumptions:
Figure 4.5 Example theory of change template table.

get her child to the appointment, and (d) she is open to responding and wants to vaccinate her
child. A simple yet very important assumption is that mothers want to vaccinate their children.
Vaccination has been debated in many societies and there may be multiple social and cultural fac-
tors to consider along with the science.
Next, how will you reach your target audience? What is your entry point? Since you have spent
time on community-driven research and participatory planning, you will have a better idea of the
context in which you’re going to operate and you’ll have already refined your assumptions regard-
ing your entry point to reach the target audience. It could be an existing supply chain. It could
be partnering with an existing organization. Going back to previous examples, if your goal is to
introduce a new medical device which will lower infant mortality, options for your entry point
might include local clinics, physicians’ associations, nurses associations, hospital managers, or the
ministry of health. These are all very different entry points, and your choice will differ depending
on the setting you are working in. For the vaccination text message reminders example, such an
intervention would work best building on an existing healthcare provider with records for all its
patients. Mobile numbers could be collected from or added to each patient’s record, and an auto-
mated system could be set up in collaboration with an existing telecom provider.
What needs to happen for your solution to work?
Now, to get from here to your goal, what steps are needed? Once you achieve your entry point,
how does your solution work? Walk yourself through each node of change. Note down the pos-
sible outcomes at each node. What needs to happen for your solution to work? This will lay the
foundation for your future business plan, which will require you to think about what you will do
if things don’t go according to plan. It is impossible to emphasize enough the importance of flesh-
ing out your assumptions at each junction, so that you can continue to collect data to back these
up and assess to what degree they will hold and be prepared with a contingency plan for what you
will do if and when they don’t.
Finally, what is/are the measurable changes(s) your social venture will produce? Identifying the
measurable outcomes you will be looking out for to assess your success is critical. The challenges
you’re facing are sticky stuff; otherwise, someone else would have solved them a long time ago! So
arm yourself with these data tools to amplify your chances of success. You’ve already identified the
long-term change you see as your goal, but what intermediary changes do you need to create in
order to get there? How will you know if you’re making progress or need to step back and reassess
what you’re doing? Sticking to the text message reminders example, if your goal is to reduce child
mortality before the age of five, the measurable effects you’ll directly produce from your inter-
vention are that more mothers will bring in their children for vaccination, the number of missed
vaccination appointments will be reduced, and the number of children vaccinated will increase.
Incremental Innovation and Disruptive Innovation

Are Not Mutually Exclusive
People talk about incremental innovation and disruptive innovation as if they’re mutually exclu-
sive. A common misperception is that to build new markets, we need to invent things that didn’t
exist before. That’s actually not true most of the time. Building evidence-based solutions requires,
by definition, that you are exercising some form of incremental innovation. Tackling challenges
most likely brought about by market failures means, by definition, that what you are doing is dis-
ruptive. So, by definition, you are doing both! And you will hack this challenge to death.
So don’t be afraid to proceed one step at a time. You can still be disruptive and ambitious
and make a phenomenal change, taking what others have done before you and building on their
results. Whether positive or negative, i.e., whether building on what has worked or what hasn’t,
you are maximizing your chances of success if your solution is based on evidence.
That’s not to say you shouldn’t pursue bold ideas if you have come up with something entirely
new—go for it! This is just to say that whatever you do, test it first, pilot it first, and make sure it
really works in the way you want it to. The stakes are high. Whatever you do will affect others.
And often, there are unintended consequences that can be either positive or negative. So proceed
with care, and don’t play God.
Remember the importance of building on what others have done before—learn from those
who have attempted to solve this problem before you—dig up the evidence collected about your
key assumptions. This is where the research you’ve been so arduously conducting will come in
handy! The only way we can go farther than those who came before us is to “stand on the shoulders
of giants,” as the famous saying goes. This means that in the majority of cases, rather than rein-
venting the wheel, social entrepreneurs will build on the incremental progress achieved by those
before them and push that progress further by using all the knowledge they gained.
It’s not a sprint to the finish line.

We are really getting there! You’re starting to get an idea of how to tackle the challenge you set out
to change, what your product or service will do, and how it will work. You might not have it all
figured out yet, and that is completely okay. Don’t think at this stage you’re supposed to already
have all the answers. You’re simply supposed to take the time and space required to brainstorm
different ideas, test them out with your team and stakeholders, and develop them further until
you’re able to identify a solution that has the potential to work.
It’s not really fair to represent all this in one chapter, as the development phase can take
months, if not years. Don’t rush it. Your goal is not just to come up with something—it’s to come
up with something that works. That’s why the theory of change is so valuable—because it keeps
you in check and doesn’t let you get away with proceeding any further until you can really prove
that the solution you’re proposing will have the intended effect.
Get out there and talk to people and see what they think! If you’re not being met with reac-
tions along the lines of, “This has to be done!” then you might want to go back to the drawing
board. You want to come up with something that people want and need. And you want to make
sure the people who want it and need it are those you’ve designed it for and with! Stay immersed,
stay focused, and don’t be afraid to come up for air when you need it. This takes time, it’s not
a sprint to the finish line. There’s no magical button you can push or formula you can follow to
build your solution. You’ll never feel fully equipped, you just need to unleash your brain cells and
start working.
Exercise: Your Deliverables

You’ll need to go through multiple iterations to come up with your deliverables, so take your time.
Just make sure that when you’re ready to deliver, you can summarize your answers in one sentence,
and with one diagram:
1. Sketch out your product or service. What is it? How will it work?
2. Test it out with potential end users. Who is your audience? What is their feedback? How did
you incorporate it?
3. Fill in your theory of change table, listing the underlying assumptions beneath each step. Has
your research and testing validated each assumption? What else might you need to do to prove
this will work?
4. Last challenge: summarize your solution in an “if–then” sentence!
CHAPTER SUMMARY
◾◾ Starting with the checklist of attributes we created in the last chapter, this chapter is
all about making them come to life.
◾◾ Working with your end users and bringing in new skills needed to your design team,
you’ll need to experiment with potential ideas and go through multiple iterations of
trial and error.
◾◾ The most important thing to keep in mind is that by definition, in trying out different
things to see what works, you’ll need to fail. Failing on purpose is how we learn and
discover new solutions!
◾◾ Start by brainstorming potential ideas, avoiding idea killers, and considering all
options with your team and your end users.
◾◾ Then, prototype a number of potential winners, testing them out with your stakehold-
ers to get feedback.
◾◾ One of the first steps in testing your solution is putting it through the theory of change
test. List out all your assumptions and validate them. Can this product or service actu-
ally bring about the changes you’re aiming to create?
◾◾ Before you launch forward with building an entire venture around this potential solu-
tion, you’ll need to organize one or more pilot tests. We’ll add the components needed
to test this out more fully in the coming chapters, such as impact metrics and business
plan components.
◾◾ Most importantly, make it fun. The design phase is one of the most creative stages in
social entrepreneurship. Explore different options and push yourself beyond conven-
tional boundaries … who knows what you might find!
Company profile: D-Rev, www.d-rev.org.

Founded in 2007, US 501(c)3 nonprofit organization.
Product/service: D-Rev is a nonprofit product development company that designs and deliv-
ers medical technologies that lose the quality healthcare gap for under-served populations.
Current projects include a high-performance knee joint for amputees in the developing
world and jaundice treatment devices for newborns.
Goal: Close the quality healthcare gap for under-served populations.
How it works: It is rarely viable for for-profit companies to design and develop products
for the 4 billion people living in under-served populations. D-Rev closes this gap by subsi-
dizing research and development and working with a global network of partners to design
disruptive and profoundly affordable products aimed to improve health. Their products are
world-class, market driven, and user obsessed. By relying on grants and private-sector con-
tributions (such as from the Bill and Melinda Gates Foundation), they own the research,
design, and development stages and then partner with industry leaders to manufacture and
scale the product for maximum impact.
Company profile: One Earth Designs, www.oneearthdesigns.org, www.oneearthdesigns.com.

Founded in 2009, registered in the United States, China, Hong Kong, Norway.
Product/service: SolSource is a miniature solar power plant that provides solar cooking,
heating, and electricity generation in one elegant and affordable system. The SolSource
product roadmap also includes add-ons that enable water purification, desalination, solar
autoclaving, food dehydration, home cooling, and refrigeration.
Goal: To replace polluting cooking fuels (which currently kill 4.3 million people each year),
with affordable solar energy for cooking, home heating, and electricity.
How it works: SolSource was inspired by and developed in collaboration with rural Tibetan
families in the Himalaya. Prior to SolSource, these families often cooked indoors with yak
dung fuel in adobe stoves which contributed to severe health problems, high death rates, and
reduced economic opportunity. By using highly reflective panels that direct sun light toward
the bottom of the pan, which is placed in the middle (similar to the shape of a satellite with
the pan replacing the antenna), SolSource harnesses solar energy seven times more efficiently
than competing technologies, enabling families to access clean energy to replace polluting
traditional fuels.
Company profile: Hippocampus Learning Centers, www.hlc.hippocampus.in.

Founded in 2010, Bangalore, India.
Product/service: Provides preschool (under age 6) and after-school (over age 6) educational
services for children in rural India. Carefully selected and trained local women use fun and
interactive methods to help children learn and ultimately do better in school.
Goal: To create high-quality, low-cost educational programs for children in rural India,
making learning available, affordable, and fun
How it works: HLC focuses on highly efficient, streamlined operations and scaling to
600–700 centers. Each learning center is independent, autonomous, and financially sustain-
able. All performance monitoring and assessments are simplified into efficient checklists
systems that are the responsibility of each center, reducing travel costs of headquarters staff.
Headquarters is highly selective in their recruitment and training of new teachers. They hire
only local women who may lack formal training and experience but have a vested interest
in the success of the community’s children. They personally train each teacher in the skills
required and provide basic, standardized packages containing all necessary educational
materials to teach the children.
Case Study: Hippocampus Learning Centers

Designing Impact, Scale, and Sustainability
The Hippocampus Learning Centers (HLC) were designed for scale. The vision is to create
learning opportunities for children and youth in rural India, thus enabling power of choice.*
Headquartered in Bangalore in the state of Karnataka, India, HLC has 104 learning centers at
the time of writing. The design of this social venture, on multiple fronts spanning organizational,
content, and delivery levels, was developed to streamline operations and maximize results.
The challenge identified by the HLC team was a learning deficit in India and especially in
rural areas, where children were not exposed to a literacy environment until they entered public
school at the age of six, already putting them at a disadvantage in their cognitive and social ability.
This was manifested by poor learning outcomes, with ripple effects throughout the life cycle. The
HLC team asked, “What if we could provide children with the best chance at a fair shot in life?”
They did this by developing a preschool system that fulfilled the criteria of availability, accessibil-
ity, acceptability, and quality. Innovation at multiple levels was a key to ensuring that both the
educational model and the management model of each center were robust enough for them to be
applied and replicated in hundreds of centers at large scale without sacrificing quality. Through
user-driven design, the team identified two key factors that made this possible: the profile of the
teachers recruited and trained, and the nature and content of the curriculum. Both were simplified
and streamlined to allow for application at large scale.
Rather than recruit teachers with training and experience in the existing public school system,
the HLC team recruited women from the village in which each center operated. The women did
not necessarily need to have any formal training or experience as teachers, nor was it required
for them to be proficient in English. HLC’s team trained them in the complete package of skills
required. A large portion of an average day’s curriculum and communication in a Hippocampus
center could be delivered using the local language, with certain keywords, phrases, and lessons in
English. HLC’s team found that it was more efficient and effective to train a fresh new learning
and teaching corps rather than to work with pre-trained, experienced teachers who would then
have to unlearn their existing habits.
HLC teachers had a certain degree of autonomy in running their own center, and gained a
sense of independence. A large portion of the curriculum was not only on language, math, or other
academic topics but also on following instructions, behaving in a classroom, working as a team,
and functioning within an orderly system.
Independence of the learning centers on multiple levels was a key factor to success: each center
as its own unit is financially sustainable (surpassing 100% cost recovery) and the only nonre-
coverable costs are those of the central headquarters. Teachers at the center level are responsible
for recruiting students and have the freedom to tailor and adapt the learning material and style
to a degree, incorporating local contexts and cultures. The role of the central headquarters is to
* http://hlc.hippocampus.in/hlc/about/our-vision/.
develop and update the curriculum, branding, marketing, monitoring, and assessment. This cost
can be covered by increasing the number of centers, so that their small profit margins will add up
to surpass the running costs of the central headquarters. Thus, in designing the organization, it
was essential to ensure that the size of the central headquarters would not need to greatly increase
over time in proportion to the number of learning centers. This could be accomplished through a
combination of factors.
One is decentralization and automation of monitoring and assessment. It would be too costly
to send staff members from headquarters to monitor the performance of each center in the rural
areas. Instead, field coordinators are recruited and trained to serve this role. Each field coordina-
tor monitors a cluster of centers within a defined geographic area, allowing her or him to conduct
daily site visits to centers within the cluster, ensuring that each center is visited once per week for
two to three hours. Automation of the data collection was also developed by equipping each center
with a low-cost tablet, allowing for a more streamlined approach to the recording, collection, and
analysis of performance indicators recorded during the field officers’ site visits.
Additionally, many centers operated both as an early learning center in the mornings, hosting
children aged under six, and operated a remedial English program in the afternoons, hosting chil-
dren over the age of six who had gone on to enroll in the formal school system. For the remedial
English program, HLC’s team researched existing reading programs from all over the world and
created their own reading program, which simplified elementary-grade English into six levels (as
compared with over 20 levels in other programs from around the world). They ordered low-cost
booklets coded by color to reflect the levels. They called the program “Grow by Reading,” where the
first two words represent the six levels of advancement: green, red, orange, white, blue, and yellow.
Thus, the system was simplified and made easy to understand by teachers, children, and parents.
Another design factor was the development of a package of physical resources for each center.
In order to ensure standardization across centers, a basic package of educational materials (books,
chalk, toys, seating mats, etc.) was created to supply and equip each teacher with the core range of
essential teaching materials. Thus, each time a new center is opened, the characteristics and costs
are known in advance, and the procurement of supplies takes place according to a preset system.
Beyond design, in growing the organization, an essential ingredient to smooth expansion was
the development of robust systems that could withstand the strain of rapid scale. It was calculated
that in order to become financially sustainable as an organization, HLC needed to scale to 600–
700 centers. How could the team maintain quality of performance at each center and manage the
exponential increase in workload at the central headquarters? The former was ensured through
decentralization and automation of monitoring and assessment. The latter required a clarification
of processes and simplification of roles, in order to streamline operations.
That is to say, during the start-up phase of any organization, a large number of roles are played
by a small number of people. The founding team is responsible for building the content, recruit-
ing, assessing, marketing, accounting, and keeping up with growth. As the organization scales,
these roles are simplified. Rather than having one person responsible for the teacher recruitment
and student recruitment required to open each center, the mature organization will have a recruit-
ment officer specialized in recruiting new teachers and a marketing officer specialized in recruit-
ing new students. Similarly, during the start-up phase of an organization, many procedures and
decisions are taken in an ad hoc fashion, on the spot, depending on each scenario and on a case-
by-case basis as the team develops their approach. As the organization scales, these processes and
procedures are evaluated and put into a system.
HLC was initially piloted with 17 centers. This is highly unusual in traditional development
fields, where one center may be a more common initial pilot. The founder of HLC, Umesh Malhotra,
insisted on designing it for scale from the start. He wanted to “test it until it broke.” From the initial
17 centers in the first year, he grew the organization to include 78 in the second year, until things
started to go wrong and teachers started dropping out. His test question was “How would I need to
run this in order for everything to go wrong?” And then he fixed it so that these things would not
go wrong again when the organization grew. His goal was to design it for scale because his end users
were the millions of children without access to affordable quality education.
Education and healthcare in high-poverty populations have always been a challenge in terms of
delivering affordable services at high quality using a sustainable model—the international devel-
opment and philanthropy world has been debating for decades whether it’s possible to deliver edu-
cation in high-poverty populations using a self-sustaining financial model. Just as we’ll see many
examples in healthcare that have proven that it is in fact possible, HLC serves to demonstrate with
their data and results the real possibility of delivering education using a for-profit model. What are
the characteristics that allowed them to achieve what no other education organization targeting
low-income children has ever achieved before?
The key to their success was not only the business case. It was that they built a system of prod-
ucts and services using innovative methods and designed for scale, envisioning a target from the
start that reaches thousands if not millions of end users and piloting a system with the vision to
grow it to that scale. This has involved a simplification and standardization of the core educational
materials and concepts and of the management of the learning centers themselves. It has involved
a decentralization of the monitoring and assessment process using an efficient checklist system,
which is now also being automated using low-cost tablets at each center, to further streamline
the quality assurance process. Finally, it has involved building systems for scale. This includes
simplifying roles as the organization grows, where at the start-up phase one person is responsible
for carrying out various roles and making various decisions as the founding team develops their
approach; and as the organization grows they evolve into a more specialized division of labor.
This allows them to reach large volumes with each person in charge of one specialized part of
the process: marketing, recruitment, content development, product development, delivery, and
evaluation. At the time of writing, the HLC team is undergoing a process mapping phase whereby
each step taken within this operation is evaluated to assess how that step can best fit into a system
that’s streamlined and efficient and can function as a well-oiled machine, all the while keeping
in consideration how to conserve the organizational culture and hold on to the mission as the
organization grows.
Chapter 5
Market Strategy
The Multidimensional Market

This Little Solution Went to Market
Now that you have a basic idea of what your solution looks like, who it’s for and how it works, it’s
time to take the next step in the design challenge. How will you actually get it to them? How will
you price it? Where will it be provided? Let’s start building your supply chain and your value chain.
You’ve learned a lot about how people interact with the social challenge you’re tackling. Now,
it’s time to find out how they’re going to interact with your solution. Your market strategy basically
answers the question, how will you reach people? How will they find out about you? Who are you
serving, and where? This is a continuation of your testing phase, to ensure that the solution you’re
proposing is truly what’s needed.
In this chapter, we’ll start building the basics of your business model so that you can take the
first step in building a venture around your product or service. How will your solution penetrate
people’s lives?
Compass: Vision, Mission, Values

Before we start, let’s make sure you know where you’re trying to get to. This is a time when you’ll
be testing out your theory of change and building your vision and mission, which will drive your
work for years to come.
Every venture has a mission, vision, and core set of values. These drive the work of the orga-
nization or initiative, and every person, process, decision, or output related to the venture always
refers back to these driving factors.
You’ve already started to form a vision of how things could be different from the way they are
today. Now, that vision is starting to take shape. It’s time for you to start thinking about how you
will put into a clear, concise statement a description of the world you are trying to create. This
helps ensure that all stakeholders are clear on what you represent and why you are doing what you
are doing. Most importantly, it helps you and your team keep your eyes on the prize!
87
Vision
Your vision is a description of how things could be different from the way they are today. Describe
the world that you would see if you were able to completely transform your social challenge! All
your work, everything you have done up until now and everything you will do from this point
onward, is driven by your vision. It can sometimes be daunting to put it into words! Keep it
simple—sometimes, the most effective vision statements are simply a counterfactual description
of the world as it is today—a statement saying what it would be like if your social challenge was
knocked out of the ball park. For example, your vision could sound something like this: “A world
in which every child has the opportunity to fulfill their love of learning.”*
Your vision should be aspirational. It is what drives you, and you want it to drive others to join
forces with you. Many people might have similar visions, each working in their own way to help
that vision come true. Clarifying your vision will help you find like-minded people whom you can
work with to collectively achieve larger progress toward that vision than you would alone.
A world without poverty is a vision that many organizations work toward, each with its own
different mission (increasing the earning power of farmers in Kenya, increasing access to capital
for immigrants in the inner city in New York, and educating female heads of households in the
slums of Egypt are three separate missions that all work toward this same vision).
Mission
Your mission is the assignment you have tasked upon yourself. How are you going to make this
vision possible? The mission is the path you are taking to reach your vision. By developing your
products and services using user-driven design, testing them out and fleshing out your theory of
change, you’ve already taken the first steps toward charting that path.
For example, if your vision is a world in which every child has the opportunity to fulfill their
love of learning, then how are you going to work toward that vision? The mission statement needs
to be more specific and tangible than the driving vision. There are many potential ways of fulfill-
ing your vision: the mission specifies the what, who, and how of your work.
A strong mission statement will capture your desired outcome and target population, and what
it is that you do. It is your organization’s introductory statement to the world! Just like when a
friend or colleague introduces you at a reception, “Ms. X does _____,” your mission statement is
how you introduce your organization, “We do ____.”
A common rule of thumb for the mission statement is the 4Ms: memorable, manageable,
measurable, and motivational. Another common rule of thumb is keep it short. You don’t neces-
sarily need to go into too much detail about “how” you will do it, but be extremely clear about
“what” you are doing: “Save kids’ lives in Uganda. Rehabilitate coral reefs in the Western Pacific.
Prevent maternal–child transmission of HIV in Africa. Get Zambian farmers out of poverty” are
all hypothetical examples of mission statements that are less than eight words.† Don’t panic if you
need more than eight words of course; these are just a few very concise examples—the important
thing is that you keep it clear and concrete, filtering down to the core of what you do.
* This is a real-life vision statement that was drafted as part of a business planning process with Ana Aqra
Association and Alfanar venture philanthropy (http://ana-agra.org/).
† Quoted from http://www.ssireview.org/blog/entry/the_eight_word_mission_statement.
Market Strategy ◾ 89
Vision
Theory
Values of Mission
change
Value
proposition
Figure 5.1 Organizational compass.
Values
While the mission and vision of your venture refer to the social outcomes you’re working toward,
values refer to the characteristics and processes your work will adhere to. Thinking about these
with your team is key to building your market strategy, and your venture moving forward, in
accordance with your values. You’ll need to refer back to these at multiple points down the line
when making decisions that could result in potential trade-offs.
What values does your organization follow? Examples of common values are transparency,
equality, integrity, empathy, quality, safety, and innovation. Others are teamwork, respect, part-
nerships, patient centeredness, student centeredness, and client focused. Some organizations use
nouns; others use phrases or expressions, and yet others use sentences. Your organization’s values
will inform the decisions and prioritizations you make and the behavior of your team.
Social entrepreneurs serve as leaders in embodying the values of their organization and inspiring
everyone in their organization to internalize these values and demonstrate them in all actions. In
HLC’s case, the organization’s mission, vision, and values extended to anyone who was part of the sup-
ply chain; not only the teachers at the field sites and managers at the headquarters but also the cleaning
team who were hired to maintain the centers, the parents who dropped their children off at the door,
anyone who had any interaction with the centers, were encouraged to embody its goals and values.
The reason it’s important to spend a lot of time thinking about mission, vision, and values at
this point—and continuously in the future as you chart your path—is that together with your
theory of change and value proposition they form the compass for your social venture. Your deci-
sions will be made based on how you will affect people’s lives. Your vision is the underlying force
that led to your creation of this solution. And your theory of change was built around that and
gave birth to the mission, values, and value proposition of your social venture (Figure 5.1).
Value Proposition and Unique Selling Point

Building on the previous section, your value proposition captures how this vision, mission, and
set of values translate into benefits for your end user. What are you offering people? How will you
make their lives better? Quite literally, what value are you proposing? Why should people give you
their attention, time, and money?
Your value proposition is the added value you’re contributing to peoples’ lives. It is important
to be able to clearly and concisely describe what your product and service are, who your end user
is, and how you are making their lives better. This is because you are going to be building the
components of your social market strategy around this value that you are trying to create. This is
how you will take your solution to market!
As part of articulating your value proposition, make sure you’ve captured your unique selling
point (USP). What makes your product or service better than the alternatives? What are you offer-
ing that no one has offered before, or how is what you are offering better? Is it more affordable, is
it more effective, is it more user-friendly, is it all of the above? Is it simply the first of its kind, with
data demonstrating the demand? Your USP will explain why your end users should turn to you,
rather than the best possible alternative out there.
The main advantage you have compared with others who have tried to build social solutions in
the past is that you’ve built it with your end user. By now, you know that people will likely not be
interested if you just come up to them and try to introduce a product or service by informing them
that this will make them healthier, more productive, or replenish their environmental resources for
the future. The thing about social outcomes is that they are long-term concepts. People are focused
on their immediate needs and their lives in this moment.
This is why articulating your value proposition is very different from articulating your
vision and mission. Stay focused on the product or service itself. How is it making people’s
lives better right now? We help children perform well in school by providing top-of-the-line
preschool at prices parents can afford. We help you save time and money and come home with
a healthy meal for your family. We help mothers deliver safely by providing low-cost, high-
quality care.
Co-creation
Product
Customer
Collaborators
Place
Promotion
Value
Proposition
Competitors Cost
Positioning Price
Figure 5.2 Multidimensional market: the 5Cs and 5Ps of social entrepreneurship.
Ask your end users and testers to put it into words themselves, as a continuation of your co-
creation and user-driven design! Then you can communicate it to others and build your social
market strategy around it (Figure 5.2).
Market Size: Defining Your Denominator

An important part of building your business model is estimating the number of people you are
trying to reach. So far, we’ve thought a lot about who your end user is and what their characteris-
tics are. Now it’s time for you to calculate how many people you’re targeting.
This is different from what you did at the start of your journey while characterizing your chal-
lenge. At that stage, you were researching how many people are affected by the social outcome
you’re addressing. But now that you’ve developed your solution and are working on your business
model, how many of them do you think you can reach?
This is your denominator, against which you’ll track progress moving forward. In the coming
chapters, you’ll piece together the operational pieces and distribution channels required to reach
your target, figure out the success metrics you’ll use to measure whether and when you achieve
the changes you’re aiming for, and determine how you’ll design and manage the financial flow in
and out of your venture.
Estimating your market size is extremely challenging, but it’s critical to know what kind of
denominator you’re dealing with here. Billions of people around the world may be affected by
the social challenge you’re addressing. Are you aiming to reach them all? Let’s start by narrowing
down on the customer segment(s) that your value proposition speaks to.
Let’s walk through an example together. In this example, let’s say you’re serving pregnant
women. You’ve co-created your solution with women and their families in a rural setting in Kenya.
How many pregnant women per year are there in similar rural settings in Kenya? Do you want
to make the assumption that your solution can be adapted and offered in similar rural settings
in other countries, or do you want to put that aside for now until a later expansion stage? You are
already narrowing down your numbers by making these decisions. Now, depending on how much
this solution is costing you and how you are going to price or finance it, you can narrow it down
further based on the number of people who are willing to pay. Then, depending on where you
are going to sell it and how you will promote it, you can set a target of the number of people you
might be able to reach.
It’s important to realize that the size of your market speaks to the need and potential. How
much you can grow to fill that need and potential depends on a host of other factors including
your resources, external environment, and internal operations. We will discuss these in more
detail in the coming chapters.
Let’s take a look at the different dimensions of your potential market, in order to help form a
more complete picture.
Social Market Strategy

In this chapter, we’ll use the 5Cs and the 5Ps to encapsulate the key components of a social market
strategy. All these components center around your value proposition, which is at the core of your
venture. You’ll notice that you’ve already dedicated a substantial amount of time and resources
toward building many of these components! The co-creation process, the customer, the product,
and the place were the focus of the past three chapters. Now, we’re going to start thinking about
the cost and price aspects. Then we can go into more depth about positioning, promotion, com-
petitors, and collaborators. Going through these different dimensions one at a time and then
putting them all together will help you determine whether and how your solution will be feasible.
This is all a continuation of the testing process you started in the last chapter—prototype, test,
iterate, until you find the combination that works. Don’t forget, innovation happens at multiple
levels; it’s not just the product that needs to work, but also the price, the distribution channels, all
the nuts and bolts of your solution. So let’s test and iterate each component until we can get that
solution to market!
Co-Creation
That’s right, co-creating with the community was the first step you took in developing your social
market plan! This is because it made sure that your product or service is user driven (Figure 5.3).
Marketing gurus often talk about using a “push” versus “pull” strategy, i.e., aggressively or pre-
emptively entering a market versus responding to cues from customers. Co-creating with the
community was your first step in the “pull” process. Both are needed, and we will talk about some
“push” strategies further in the chapter.
Product
The product or service you co-created through user-driven design is the core of the marketing
strategy. What are the key attributes of your product or service that will make your customers’
lives better? What is your core offering? This will define your branding, which we’ll talk about a
little bit later. It will also inform how you want to position yourself in the market. Your identity
as a social venture and the image you want to project are based on the solution you are offering.
Customer
We talked about population segments in Chapters 2 and 3. Who is your core customer? You
may be offering your product or service to more than one population segment, but you need to
be clear on this when developing your marketing strategy. In the most simple and basic of cases,
a social venture will target one core customer: expecting mothers in remote rural settings with
lack of access to health information, young children in villages in India, nomadic tribes in the
Himalayan plateau, overworked underpaid mothers in US cities with lack of access to healthy
Product/ Value
Service Proposition
Market
End User Strategy
Figure 5.3 Co-creation as a cornerstone.

Understanding your target audience informs your solution, value proposition, and market strategy.
foods (see interview box). It’s important to understand both the characteristics that tie your cus-
tomers together and any variations and heterogeneity that will result in diversities of behaviors and
preferences. In other cases, you might have a huge amount of customer segmentation, in which
case you’ll have to tailor your messaging—and the options that are offered with your solution—
around multiple core groups.
Try to put numbers on this dimension of your social market strategy—how many end users are
you aiming to reach? How much will it cost to reach them? How will you retain them? Intentions
are not enough to grow your customer base. People will try your product once out of curiosity
or because it has been co-created in a way to maximize social impact. But they will only become
repeat customers if it makes their life easier and if it makes them happier.
Place
Where are you going to offer your product or service? Tell us more about the part of the world
you’re working in, and what the unique features of this context are. What kind of market is it? Are
you working in a dense urban setting, a remote rural setting, or something in between? What is
the infrastructure like, and what are the distribution channels like? Is your social venture mobile,
or is it stationary? Are you opening a new distribution channel (store, website, clinic, school) or
piggybacking on existing channels? In either case, are you asking your customers to come directly
to you, or are you making your product/service accessible to them vis-à-vis a place or activity
they’re already passing through? Your place of distribution is affected by and will affect your value
proposition, customer base, costs, competitors, collaborators, pricing, and promotion channels—
this is to say, it is a central component of your social market strategy. Ultimately, the leading
factor will be your target audience’s preferences and needs, which you have collected information
on early during the co-creation process. In the next chapter, we’ll talk about various distribution
options to expand the reach of your solution in different places.
Cost
Measuring and optimizing your costs will be key to your success in both maximizing your cus-
tomer base and ensuring your financial sustainability. As we saw in Chapters 3 and 4, while it may
seem that the lowest cost formula is always the desired option, this is not always necessarily the
case in achieving your mission. Your goal is to make the product or service as affordable and acces-
sible as possible, and that means offering the value needed to produce the desired social outcome
in the most affordable manner. If making it low in costs results in a lower quality or durability
product, which does not result in the desired outcome, then it defeats the purpose. So when think-
ing about affordability, think beyond lowering costs. Sometimes, your end user can’t afford a low-
quality, low-durability product; they might require other aspects that will get them to where they
need to go in terms of escaping a poverty trap (remember the S-shaped curve).
Affordability isn’t necessarily always contingent just on how you manufacture your solution,
it can also be attained through financing the product, for example, through creative payment
schemes or through creative distribution schemes, as we’ll see in future chapters. These multiple
aspects should all be reflected in your marketing plan and your business plan. A great example is
water.org, which experimented with different payment options to make water affordable.*
* http://water.org/solutions/watercredit/.
Remember Catlin Powers of One Earth Designs?* She pointed out that in building their busi-
ness, they had the option to choose between lowering their costs or lowering the weight of their
solar-powered cook stoves. Their mission was to improve health and environmental outcomes in a
low-resource setting, but if they went for the lowest-cost solution, it wouldn’t have attracted their
target audience. They had to select the cost that optimized their value proposition by providing
customers with a less costly but also more convenient alternative to what they were already using:
wood-fuelled cook stoves. If their product was heavier and less convenient, why would a prospec-
tive customer make the switch (remember the lead shoes)?
Affordability does not necessarily mean choosing the lowest-cost option.
Once the value proposition has been fulfilled, however, minimizing costs is generally desired.
This is especially the case in a social venture, where your target audience is most likely a low-
income population. You’re not designing a luxury good or attempting to sell a “VIP” service.
Therefore, as long as it does not interfere with accessibility, lowering costs is usually key to reach-
ing as many people as possible.
Price
While the cost refers to what you’re paying to produce, promote, and distribute your product or
service, the pricing component refers to what you’re charging your customers or clients. Not only
the price you set but also how you’ll communicate it is part of your marketing strategy. After
all, you are pricing and promoting this product or service in a way that will allow you to pen-
etrate your target market to the largest extent possible. Your target market is the end user you’ve
described in your customer section. In most cases, a social entrepreneur’s goal is simple, to make
the product or service affordable for as many people as possible. In this case, the pricing is a reflec-
tion of the cost of production and distribution, adding only the administrative costs of running
the organization to make sure that you break even.
In certain cases, you can price your product or service below the cost of production, if you’re
able to subsidize it with other activities or sources of revenue. These may include donations from
fundraising, corporate sponsors, or the addition of multiple revenue-generating activities that can
cover the costs of one another. An example of the latter is when an organization offers multiple
products or services to multiple customer bases, some with higher profit margins than others. This
is called differential pricing, and it allows the organization to cross-subsidize the lower-priced items
using the profits from the higher-priced items. Famous examples of differential pricing include
the Aravind Eye Hospital and Narayana heart health centers, where patients with higher incomes
are charged more and patients who cannot afford to pay are provided with the same high-quality
service at no charge.†
What do people want, how much will they pay for it, how would they like it packaged, and
where would they like it sold? Listen to your end users and you will find the answers.
* https://www.oneearthdesigns.org/.
† www.narayanahealth.org, www.aravind.org.
If your research suggests that your end user is willing and able to pay more than the amount
resulting from the previous formula, then you might want to consider charging more. This does
not necessarily conflict with your mission, as long as charging a higher price is reflected by a
corresponding increase in your social impact. If you’re able to produce a product or service at
extremely low cost but want to value it at a higher price depending on the purchasing psychology
you’re experiencing in your target audience, this increased profit margin may in fact allow you
to scale your operations and reach more people. If you’re not sure, you can go back and conduct
market research similar to the community-driven research you conducted at the start—it’s all part
of the co-creation process. What do people want, how much will they pay for it, how would they
like it packaged, and where would they like it sold? Listen to your end users and you will find the
answers. If you’re dealing with a diverse target audience and some may be able to pay more than
others, you may consider differential pricing.
If you’re not sure, you can go back and conduct market research similar to the community-
driven research you conducted at the start—it’s all part of the co-creation process.
Competitors
Understanding your competition is part and parcel of understanding your customer. Even if you
think your product is unique and is fulfilling an unmet need, there is most likely another organi-
zation or service provider your target audience is turning to at this very moment. You want them
to come to you instead in the future. If you’ve conducted your community-driven research thor-
oughly, you’ll have all this information at your fingertips already. If not, go back and put yourself
in your target audience’s shoes.
Literally, physically go to the other organizations and service providers, or call them on the
telephone. Find out exactly what they are offering, how much they are charging, and the other
costs associated with accessing this product or service (transportation, time off from work, etc.).
Ask your target audience who they go to, and why. Would they be interested in your product or
service, and what characteristics would make them become your customers or clients?
Oftentimes, your product or service is truly unique and is offering a solution for the first time
to this target audience, that no one else has offered before. Still, you’re competing with something
else for their time and money. What alternatives have they been turning to, to deal with this social
challenge and related cochallenges? Even if it’s been a band-aid rather than a solution—or on the
flip side, something that has been making it worse!—you are asking them to abandon old practices
and develop new ones. Getting to know people’s activity patterns and decision-making processes
is part of characterizing your customer and also part of characterizing your competition. Where
are they putting their time, thought, attention, and money right now, which you want them to be
putting on you instead?
Positioning
If your solution is competing with existing products or services or with other alternatives that
people turn to in the absence of a solution, people will choose you if you can convince them that
you offer more value. This is why you need to understand who your target customer or client is and
how they make their decisions. Are they looking for the solution that’s the easiest to understand,
the easiest to access, the most effective, the lowest cost, or more likely, some combination of these?
Who else is offering them related solutions, and what are you offering that others aren’t? It helps to
compare yourself with other alternatives via a positioning matrix. The traditional matrix compares
price versus quality, as illustrated in Figure 5.4. How do other alternatives compare to you? Some
may be cheaper but poorer quality, while others may be higher quality but more expensive. Try
to think of other dimensions as well—what affects your end user, other than price and quality?
Figure 5.5 provides an example of this more multidimensional analysis.
Filling out a positioning matrix will help you see who your closest competitors are. These will
be the ones literally positioned the closest to you on the matrix. It might help to start with just
a two-axis grid comparing price and quality to first do a “kitchen sink” analysis of all potential
competitors. Then, once you’ve identified your closest competitors, you can do a multidimensional
analysis to figure out where your USP is that distinguishes you from them.
Promotion
How will you build a relationship with your potential customers? Whether you’re trying to pen-
etrate an existing market with existing competitors or creating a new market where there is no
comparable product or service, you still need to attract the customers’ attention and provide the
necessary information to make it easy for them to adopt your product. This goes back to under-
standing your customers’ behaviors and preferences, as you’ve been doing throughout the co-
creation of your solution. It’s also very much tied to the resources at your disposal. If you’re
bootstrapping your start-up (funding as you go), you might not have a budget for advertising.
Word of mouth, social media, and other inexpensive promotion channels may be your best option.
It’s also important to understand the sociocultural components of building ties with your
customers. What is acceptable and desirable in your specific setting? Do people prefer electronic,
paper, or human/in-person advertisements? Will you be working through existing channels (e.g.,
placing an advertisement in an existing clinic, supermarket, website, or social service center) or
Increasing quality
D E
You
Increasing price
Figure 5.4 “Kitchen sink” analysis of all possible competitors.

(A–E represent five other products or services).
Price
Acceptability Quality
You
Competitor
Durability Convenience
Figure 5.5 What dimensions are important to your end user? Where do you position yourself?
advertising independently (e.g., sending SMS advertisements, advertisements by mail, going door
to door, etc.)? We’ll talk about these a little more in the communications chapter, but for now, it’s
critical that you think of this important dimension of your social market strategy and how it will
affect your business model and use of resources. Mapping out your promotional strategy involves
centering it around your customer’s behavioral and movement patterns, your available resources
(i.e., team and funding), and the social preferences and customs within which you are operating.
Learning from best practices in the private sector in developed markets can help inform your
promotional strategy. Many companies offer their product or service for free to first-time cus-
tomers, to hook them into coming back. Another common practice is to offer packages, like
discounted prices for multiple purchases. Other ventures offer promotions for repeat customers
when they bring in or recommend new customers, providing discounts to both as an incentive.
Just for fun, try popping into a gym in any metropolitan area to experience firsthand some typical
promotion techniques (and good luck getting out)!
In other settings, people have turned to local culture to help get the word out, especially in
remote rural settings. Examples have included advertising through local musicians, troubadours,
and traveling theater troops! One social enterprise realized that people in the local community
love receiving free calendars and started printing out calendars with ads on them to promote their
products. In these cases, no private sector best practice could have been more effective than just
working with local culture.
Collaborators
Who else is taking on this social challenge and related co-challenges? Other than your customers
and competitors, what about your partners and collaborators? When working toward a social pur-
pose, you will find that you are not alone. Your mission is most likely aligned with the missions of
other organizations and initiatives, and it is not a zero-sum game. That is, others have something
to gain by helping you achieve your mission: they will get closer to achieving their mission too.
Because you have done your research on stakeholders, competitors, and the other products/
services available, you will likely have a lot of information at your fingertips about potential part-
ners. Are there resources you need that others have? Are there ways you can cut costs by tapping
into these resources? Are there ways you can reach more people by tapping into the client bases of
others?
A helpful tool to organize these relationships is the social business canvas (Figure 5.6). This
allows you to examine your central value proposition, key resources needed, and potential part-
ners to help bring these resources together. Put in all your notes about your product or service,
customers, place, promotion cost, and price and examine how they start fitting in together into a
preliminary business model. What pieces are missing that you still need to figure out?
Tool: Business Canvas

Once you’ve developed the different components of your social market strategy, it helps to put it
all together in the same place to start assessing your business model. The business canvas is simply
a visual way to organize the information you’ve already been hard at work collecting and put it
together in a way that makes you assess it as a whole. This will force you to stop and take a quick
Key Partners Key Activities Value Customer Customer

Proposition Relationships Segments
Your Social Value Chain
Resources Channels
List your key costs here: List your revenue streams here:
Figure 5.6 Your business canvas.

step back to make sure that all the pieces of your puzzle are fitting together to create your social
value chain.*
Branding
Key Concepts
Branding is how you present your social venture, the image you want to project, and how it’s cap-
tured in all your messaging and more. Picking the name of your social venture is a huge part of
this! One of the reasons the Kiva founders went with this name, other than its meaning, is that it’s
short and has a nice ring to it—they pointed to the theory that the two-syllable name has been a
successful formula for many popular brands. Starting with your name, logo, colors, abbreviation,
packaging, and including your behavior, the terminology and tone with which you present infor-
mation, the style of interaction your team has with customers, even the way your team answers the
phone—these are all a part of branding. It’s your image. Consistency is key, and this goes down
to every detail, from your letterhead, type font, website, business cards, to your delivery vehicles,
uniforms, and every piece of your venture. These are referred to as the “identity” of your venture.
Your branding is something that sticks with you and remains consistent across messages,
audiences, and channels.
A great way to present your brand is by having a tagline. This is a short statement presenting
your value proposition in a catchy way. “TED: Ideas worth spreading”† is one you might be famil-
iar with. “One for one” is another well-known tagline, for Tom’s‡ brand. “Generation Good” and
“Redefining disposable” are two other great examples from environmental businesses.§ “Real fish.
Real flavor. Real easy” is yet another from the sustainable seafood industry.¶
Your brand and identity are developed according to the target audience specified in your the-
ory of change. Who are you trying to reach with your social product or service, and what is your
entry point? Revisit your core value proposition when branding your product or service. Stick to
this brand when representing your social venture, even if the communications content and chan-
nels may differ when speaking to audiences and stakeholders other than your target customer.
Your branding is something that sticks with you and remains consistent across messages, audi-
ences and channels.
Your branding is your first opportunity to convey your value proposition. When people look at
your name or logo, it conveys something to them. It might convey “trustworthy,” “tasty,” “healthy,” or
even “exclusive.” Don’t think that social ventures can’t attract people based on perceived exclusivity! All
people, no matter what their socioeconomic status, want the best for themselves, want to feel special,
and want to be convinced that acquiring your product or service will make them a happier person.
* This visual tool was developed by Osterwalder et al. and is publicly available. You can read more about it at
www.businessmodelgeneration.com/downloads/businessmodelgeneration_preview.pdf.
† www.ted.com.
‡ www.toms.ca.
§ www.seventhgeneration.com and www.gdiapers.com.
¶ http://fishpeopleseafood.com.
Examples
How have some of the social ventures we’ve come across built their brand and company identity?
HLC has a fun, colorful, happy logo and sign attached to all the early learning centers, field offi-
cer’s vests, website, and various other components of the organization. They are targeting parents
as their end user and want to convey a safe, happy, fulfilling environment for their children. This
includes making sure that all their staff members embody this spirit, from the cleaning team to
the executive team. Part of their company identity is cleanliness. Their centers are always freshly
painted, their signs are always clean, their field coordinators’ vests are always freshly laundered,
even their vehicles are well maintained and regularly cleaned. They need to emanate an aura of
trustworthiness and professionalism. We bring international standards to your town to brighten
your children’s future.
Another social venture is Jacaranda Health, which targets prospective mothers who will
come and deliver there. Its value proposition is that it is offering high-quality, low-cost health-
care to mothers to help them deliver safely in a country where the only two options so far have
been low-quality, low-cost healthcare provided by the public sector versus high-quality, high-
cost healthcare provided by the private sector. In this case, Jacaranda wants to brand itself as
having all the qualities associated with the private sector, while offering affordable prices. The
center’s colors, logos, staff uniforms, signs, transportation vehicles, waiting rooms, clinical
settings, and bedside behavior need to differentiate it from the public clinics and hospitals.
Awareness and advertising about the center’s existence and its services must reflect the values
associated with these details: reliable, fast, customer-friendly, high-quality care at affordable
prices. At the end of the day, their goal in developing their brand is for expecting mothers to
look at them and feel safe. You are in good hands, we will take care of you, and your baby will
be healthy.
Similar qualities have been associated with health ventures in the United States, such as the
MinuteClinic. Its branding is based on its value proposition of being available to take care of you
whenever you need and to get the best care without the wait. Customer service and interaction
(from taking phone calls, greeting customers, following up, to obtaining feedback) are all part and
parcel of conveying that value proposition.
We will also hear from the Aravind Eye Care System in the next chapter, which caters to both
paying and nonpaying customers, offering the same services for both but using differential pricing.
They brand themselves as providing the best medical care you need—they don’t tell their paying
customers that they are actually subsidizing someone else’s care. Even if you think that might be
an added advantage that would make some people want to sign up for this hospital’s services, at
the end of the day, people don’t choose a hospital to help others—they choose it to get the best
treatment they can possibly afford for themselves. Aravind sets their pricing, and their messaging
and branding, accordingly.
One last example is Newman’s Own. This is a brand of food products ranging from break-
fast cereals to salad dressings, condiments, etc., that was created for the sole purpose of gen-
erating money for social programs. It leverages the brand of the famous actor Paul Newman
but doesn’t rely only on that brand to sell. It relies on taste, quality, and packaging based on
market studies of what people look for in their supermarket purchases. It mentions that all
profits go to social programs but doesn’t rely on that as a selling point for people to purchase.
This tactic is based on the knowledge that a shopper may make a one-time purchase to support
a social cause, or a limited number of purchases, but what it takes to get a repeat customer
is a great-tasting, great-value product. This is the advice given by Doug Rauch, founder and
TC: What were your guiding principles in building the brand and
identify of Daily Table?
DR: Know your customers. This is just good business sense. The
money will follow—the bottom line should come last, every-
thing else will lead to it. If you put it first, it’s like driving
with your rearview mirror. Put your people first, and that
means treating both your customers and your employees
well.
TC: What promotional practices have worked best in your setting?
DR: I find that samples of product are powerful. If a picture speaks a thousand words, an
experience of our food speaks ten thousand. And let your customers choose. Studies
show that if you give someone an apple, they’ll toss it, but if you get them to choose it
themselves, then they’ll value it more.
TC: How can a social entrepreneur craft their value proposition to get the message across?
DR: Narratives really matter. Hone your narrative, hone your narrative, have a story. There’s
a great TEDTalk on practicing your pitch thousands of times. Also, the presence
of positives outweighs the absence of negatives in motivating customers. Examples
from the food industry are abundant—“contains whole grain” is more inviting than
“doesn’t contain GMO.” What they sell to their customers is healthy food replacing
junk food.
TC: How do you convey the positive health and environmental benefits of your venture?
DR: We talk about the amount and nature of food recovered, the number of customers
served, the basket size—how much they bought. We track all these things, and we
track their growth over time. So they’re all part of our market strategy. One thing we
decided not to do was directly measure health effects in our customers. People don’t
want to be measured. They don’t want to feel they are part of a program. This goes
back to listening to your customer and going with what works for them.
TC: Are there any common mistakes a social entrepreneur should watch out for while
developing their business model?
DR: Short termism. Five 1-year plans cannot do the same as one 5-year plan. It’s also crucial
to understand the nature of your problem—and it’s certainly more complex than you
think. Another piece of advice I’d give is building an internal culture of innovation, a
culture of risk taking, that permeates your organization from the start. If you try to
introduce a new strategy to the wrong culture, it’s like transplanting a new organ into
the wrong system. You have to embrace or at least tolerate failure. Share your failures
internally, fail “on purpose,” fail around your purpose, to learn; this is how we discover
things we need to know.
TC: How did you build your market strategy to rally people to help make this possible?
DR: You need to build mission alignment—and that means all your people. Who are the
people that already have a stake in this? Cold calls never work. Use your network,
ask who they know. Make sure when you get that one shot, you give it your best
shot.
president of Daily Table.*
Interview Box. Doug Rauch, Founder and President, Daily Table;

CEO, Conscious Capitalism
Market Research
Needless to say, when you set out to define the different dimensions of your social market strategy,
you probably won’t have all the answers. You’ll have a good idea based on your previous steps of
characterizing the challenge, co-creating the solution, and the user-driven design of your product
or service. But you might have to go out there with these new questions, test out different options,
and ask your end user what works for them. By now, you have engaged an army of stakeholders
and they are as invested in this as you! So don’t be afraid to keep testing and iterating together
until you get it right.
Market research is just like any other stage of the co-creation process you have gone through.
You can conduct surveys, focus groups, town hall meetings, visioning workshops and one-on-one
interviews. The only major difference is that now you’re asking people to respond to your proposed
solution, which you’ve already formulated. One other key difference which may arise is that the
person you have designed your solution around may not be the same as the person you’re building
your marketing strategy and business model around. For example, if your end user is a child, you
will have designed and tested your product with children. But the pricing needs to be designed
and tested with the parents!
Market research means collecting information to assess consumer habits. We already talked
about how to assess the competition. Now, how much are people willing to pay for your solu-
tion? What are they already paying for different products or services? What form of payments
do they use, is it a cash-based market or do other systems work better (such as prepaid, credit, or
some other form of payment)? Are you going to finance the payment, allowing them to pay small
amounts over a long period of time, to make it more affordable? And how will you package your
product or service—will customers pay per unit, or for a group of units bundled together? Find out
what places and delivery methods work best for people—do they want to come to you or do you
need to go to them? These are some of the questions you will head out there to find out.
Remember, innovation happens at multiple levels, it’s not just a step in the process. So keep
innovating, keep iterating, and don’t forget that every research point and every question is an
opportunity—your market research might introduce new insights and opportunities to improve
upon your design; seize this! Nothing is written in stone, and you should be prepared to come out
with answers for questions you didn’t even ask.
* dailytable.org.

Solution, meet world! World, meet solution! In this chapter, you’ve taken the design stage one step
further by figuring out how you’re going to get your solution out there and how people are going
to interact with it. This is all part of the co-creation process and user-driven design, and now you’re
starting to put a business model around it.
This involves working with your end user to gain insight on the answers to your multidimen-
sional marketing questions. Each dimension of your market strategy needs to be built with your
end user, tested, and iterated until you get it just right. And you’ll keep making improvements as
you go—a marketing strategy is dynamic and nothing is written in stone.
You’ve now taken the first few steps in building your business plan. In the next few chapters,
we’re going to continue the design process by thinking some more about distribution and opera-
tions. But before we go any further, let’s make sure you’ve taken the time to conduct the market
research you need to formulate your market strategy and put it all down in one place.
Exercise: Taking Your Solution to Market!

Before proceeding any further, please write down your answers to the following questions, using
one sentence only per item unless otherwise specified. If you need more time to conduct market
research then get back out there and do it! When you are ready to put your thoughts down on
paper, then you can tackle this chapter’s assignment:
1. Write down your vision statement and your mission statement (one sentence each).
CHAPTER SUMMARY
◾◾ In this chapter we take your proposed solution to market to test it out and continue the
user-driven design process. This requires ongoing prototyping and iteration of your
solution and how people will interact with it, to determine whether it’s feasible, what
your potential market size might be, and what your market strategy will look like.
◾◾ The first step is to create a compass for your social venture, to guide its development
and growth. This starts with your vision, mission, values, and the value proposition
you are offering to your end users—all driven by the underlying theory of change.
◾◾ Your market strategy is then assembled around your value proposition. We use the
5Cs and 5Ps to summarize the multidimensional market, bringing together customer,
place, cost, price, competitors, positioning, promotion, and collaboration.
◾◾ Building your brand means defining the customer experience you want your end users
to associate with your product or service. This needs to be clear, catchy, and consistent.
◾◾ Market research uses the same research techniques you’ve already applied to previous
questions, to define the different dimensions of your market strategy.
◾◾ At the end, write down all these dimensions in a business canvas to see how they will
come together into a value chain. Step back and assess yourself. Try looking at it like a
painting or any other canvas—up front, from a distance, at different angles, and over
an extended period of time. This will help you notice nuances and connections and
build synergies between the different dimensions.
2. Write down your social venture’s values. What values will you ask your team to live and
Company profile: Water.org, www.water.org.

Founded in 1990 as WaterPartners, became Water.org in 2009 after merging with H2O
Africa, US registered 501(c)(3) nonprofit organization.
Product/service: Water.org has created new financing models to increase access to water
and sanitation.
Goal: Driven by the challenge that every minute a child dies of a water-related disease,
nearly 1 billion people lack affordable access to safe drinking water, and more people in the
world have a mobile phone than a toilet, Water.org’s goal is “Safe water and the dignity of a
toilet for all, in our lifetime.”
How it works: Water.org fosters fresh and innovative ideas by applying the best thinking
from the private, public, financial, and technology sectors. Their WaterCredit initiative pro-
vides microloans for affordable water and sanitation access. Customers are able to repay the
loans through cost savings, as the cost-per-liter from the municipal water system is signifi-
cantly lower than what they would otherwise pay street vendors.
Company profile: Jacaranda Health, www.JacarandaHealth.org.

Founded in 2011, operates in East Africa, and also registered as US 501(c)3 nonprofit.
Product/service: Jacaranda is a maternal health service delivery organization for low-income
women. They strive to provide respectful, patient-centered obstetric care, safe delivery, fam-
ily planning, and postnatal care in East Africa.
Goal: To transform maternal healthcare in East Africa and make pregnancy and childbirth
safer and affordable for women and newborns.
How it works: Jacaranda’s first maternity center, which opened in 2012, currently operates
in the outskirts of Nairobi, Kenya, “in the backyards of the women who need them most.”
Their model provides high-quality, comprehensive maternity care at a fifth of the cost of
other private hospitals in the area. Their goal is to create a replicable maternal healthcare
model that is adaptive and innovative, and integrates the best technologies, protocols, and
systems while remaining affordable. They put an emphasis on building networks and shar-
ing lessons learned and tools with the global healthcare community.
Company profile: Newman’s Own, www.NewmansOwn.com.

Founded in 1982, US-based.
Product/service: As of the writing of this book, Newman’s Own sells almost 200 food
products across 20 categories including salad dressing, pasta sauce, frozen pizza, microwave
popcorn, cookies, pet food, and more.
Goal: To sell great tasting, high quality food and give all profits to charity.
How it works: Newman’s Own is a food company created by actor/philanthropist Paul
Newman. From the company’s first product, Olive Oil and Vinegar Dressing, all after-
tax profits and royalties have always been given to charity. Together, Paul Newman and
Newman’s Own Foundation have given more than $450 million to thousands of charities
around the world. Although Paul passed away in 2008, the food company continues his
original commitment to two basic principles: quality trumps the bottom line and all profits
go to charity. Newman’s Own Foundation focuses its giving in four areas where it can have
meaningful impact: children with life-limiting conditions, empowerment, nutrition, and
encouraging philanthropy.
Company profile: Daily Table, www.dailytable.org.

Opened June 4, 2015, Dorchester, Massachusetts, USA.
Product/service: Daily Table is a not-for-profit retail store that offers ready-to-eat meals and
a selection of produce, bread, dairy, and grocery items. Meals are priced to compete with
fast-food options, making it easier for families to eat healthier within their means.
Goal: Reduce both the effects of poor eating habits caused by challenging economics and
the impact that wasted food and its precious resources have on our environment.
How it works: Daily Table works with a large network of growers, supermarkets, manufac-
turers, and other suppliers who donate their excess, healthy food or provide special buying
opportunities. In this way, prices are kept affordable for all customers.
work by? (Use bullet points.)

3. What is your value proposition? How does this make you different from any other?
4. Who are your customers, and what is the total number of potential customers?
5. Where are you selling your product or service?
6. How much are you pricing it at? Is it priced per unit or are you offering it as a package?
7. How will you promote your product or service?
8. List your top three to five competitors and what distinguishes you from them.
9. List five potential collaborators that you could partner with to reach your audience.
10. Once you’re done writing down your answers, put it all together in a business canvas using
the template from Figure 5.6. This will help you see it all in one place and identify potential
synergies between different dimensions of your market strategy. It will also help you notice
if you’ve missed anything or can tighten up and strengthen certain aspects.
Case Study: Daily Table

Many innovations in both the commercial and social sectors are first conceptualized in response
to a need and an opportunity, with the business model and commercialization to then follow at a
later stage. This was the case with Daily Table. Doug Rauch, the former president of Trader Joe’s,
Problems Opportunity
Wasted food
discarded by Create a discount
supermarkets health food store
using fresh produce
about to be discarded
by supermarkets
Obesity in low-
income areas
“Food deserts”
Figure 5.7 The conceptual innovation.
a supermarket chain in the United States, saw that a huge amount of food was being thrown away
on a daily basis across the United States. He also noted that a large proportion of the population
had no access to fresh and healthy foods. In the inner cities and other low-income neighborhoods
across the nation, families relied largely on fast, affordable meals that were high in calories and
low in nutritional value.
Putting these two problems together, he saw an opportunity to redirect wasted food from
supermarket chains, to make it available in low-income neighborhoods (Figure 5.7). However, he
was acutely aware that ideas are a dime a dozen, and the devil was in the details. The details of the
implementation at first seemed beyond his grasp.
Rauch considered various options. One of the first questions he asked himself was, who is
already working on this? What has already been tried, what has worked, and what hasn’t? His first
thought was that he could potentially join forces with existing initiatives, and learn from the past
attempts of others.
Among those who were already working on this were food banks. However, food banks were
run by volunteers, and their operations were not streamlined and predictable. Feedback from the
supermarket chains was that if corporate managers were to take the time and resources to put
aside food, they wanted to make sure it would be picked up in a timely and consistent manner.*
More importantly, feedback from prospective end users indicated that food banks were the last
resort. According to Rauch’s research, the working poor would rather buy low-quality fast food
than accept a handout meal. They wanted to provide for their families, not think of themselves as
recipients of charity.
Exploring other options, Rauch realized that another possibility would be to join forces with
a corporate partner such as an existing supermarket chain. This would allow him to leverage
that company’s human resources, operations, distributions and products supply. However, after
looking into that option, Rauch realized that it would present a challenge to piggyback on exist-
ing resources that were in place to serve the corporation’s primary mission and bottom line. This
is because he would be competing for people, products, and infrastructure that were needed to
fulfill the corporation’s primary work. He needed to build a social enterprise staffed with people
* Rauch, D. Solving the American Food Paradox. Harvard Business School Case Study 9-512-022.
who woke up every day thinking about one mission, and one mission only: getting healthy
food to low-income neighborhoods and providing high-quality service, taste, and value in those
neighborhoods.
Rauch decided to build his own business. The next step would be to figure out key components
of the business model, including costing, pricing, and marketing. He wasn’t going to give hand-
outs, he was going to charge his customers, and he needed to make sure he was providing them
with the best value possible in order to compete with their current food choices. His goal was to
provide them with the highest quality and service at the lowest price. Thus, he sought to lower his
costs as much as possible.
Iterating the Business Model

The highest costs for supermarkets are the cost of goods they procure and sell. Rauch first tried
to see if he could eliminate this cost completely. He met with multiple supermarkets to create a
system whereby his team would pick up perishable items that would otherwise have been thrown
away. These consisted mainly of items that were nearing their “best-by” date. Supermarkets pur-
chase their supplies in bulk, leading to a certain percentage of groceries that are not sold by the
time fresh supplies come in. The unsold groceries are thrown out because the marginal revenues
that would be gained by taking the extra time and effort to sell them are outweighed by the
opportunity cost for a large supermarket. For Daily Table, if these unsold groceries are procured
at no cost, then it is well worth the investment creating delicious meals out of the ingredients,
even if it is time consuming. Thus, the first iteration of Daily Table’s business model was tested:
Rauch aimed to secure his inventory at only the cost of transportation and staff (Figure 5.8).
Rauch registered as a charity (U.S. 501c3) so that supermarkets could receive tax deductions
for giving away rather than throwing away their unsold goods. This step presented a whole set
of challenges of its own. While the proposed business model of the organization was in effect
nonprofit, it was unconventional in its innovative business model, and as a result, the registration
took more than two years to come through. Authorities could not figure out why this seemingly
regular neighborhood enterprise was trying to qualify as a nonprofit! After all, Rauch was propos-
ing to charge his customers for the goods he sold; in effect, it seemed to them he was just running
another business.
Rauch then turned to the careful consideration of pricing. In order to compete with fast-
food options, he needed to offer better value. He would tackle taste, customer services, and other
components of the value experience, but first and foremost, he needed to tackle price. At first, he
considered pricing the goods such that revenues from the sales would cover the cost of sales and
Typical supermarket Daily Table

USD ($) % of sales USD ($) % of sales
Sales 100 Sales 25
Cost of Goods 75 75% Cost of Goods 0 0%
Gross Profit 25 25% Gross Profit 25 100%
Operating Costs 22 22% Operating Costs 25 100%
Operating Profit 3 3% Operating Profit 0 0%
Figure 5.8 Estimated income statement for initial Daily Table business model.
(Reprinted with permission from HBS case (512022), “Doug Rauch: Solving the American Food
Paradox” by Jose B. Alvarez and Ryan Johnson. Copyright 2012 President & Fellows of Harvard
College; all rights reserved.)
the general/administrative costs of running the enterprise, without incurring any profit. But then
he realized that the most effective way to gain market traction in the neighborhood was to price
based on willingness to pay. What would be the best price you could put on this item, to make it
extremely attractive to shoppers? This is the question he now asks himself, and his staff, every day.
Rauch’s value proposition to his customers was that he would provide a friendly neighborhood
place where they could buy great-tasting, fresh, and healthy food at affordable prices. His USP
was the healthy aspect because he was opening his store in a neighborhood where no other fresh
products were available.
But would the people want it? How would he know their needs and preferences? Rauch con-
ducted several focus groups in his target neighborhood to obtain feedback from his target custom-
ers. This was his key into the neighborhood. He realized that while people did want to feed their
families healthy food, they didn’t want to be bombarded with health information. They wanted
fresh food fast, and it had to taste good. They wanted food that they knew the name of, not alien
ingredients they had never heard of.
A key marketing challenge was to convey the message that this was high-quality food, not
someone else’s leftovers. If you conducted an Internet search on Daily Table in the years leading
up to its launch, you’d see headlines from multiple media outlets describing this social enterprise
as selling garbage. Rauch needed a way to make sure that all safety concerns were met and that his
customers knew he wasn’t selling them anything he wouldn’t eat at home. He realized that even
the simple wording of a message can make a huge difference. If you describe his business model as
employing food waste, you’d be using waste as the noun and food as the adjective. However, if you
use the term wasted food instead, then the noun becomes food and the adjective becomes wasted.
Selling food that would otherwise be wasted was much more socially accepted than selling waste
that was composed of food.
Rauch also realized that price was not everything. People did not only buy fast food because of
the lack of availability of fresh produce. People also had limited time. He realized that poverty was
not only financial but was also related to time and knowledge. Rauch cites a Harvard researcher
who calculated that you can feed your family a fresh meal for $2.30 a day. This study assumed
that people have time to find the right ingredients and prepare them, which can be even more time
consuming and which requires knowledge about how to prepare fresh meals. According to Rauch,
Local
community:
focus groups,
Supermarkets mapping, tasting Human
and farms: resources:
supply chain recruiting the
right chef
Media:
Government: Creating
messaging and
tax incentive value
marketing
Figure 5.9 Connecting stakeholders to create shared value.

the working poor are constrained not only by financial limitations but also by limitations on their
time and knowledge regarding this subject. A mother who is working two jobs and getting home
just in time to put food on the table needs a place where she can go in, buy the food, and have it
on the table within minutes of opening the door.
For these reasons, and also to underscore the lack of safety risks, Rauch decided to offer cooked
meals at Daily Table alongside fresh produce. He recruited a chef who was from the neighbor-
hood where he was first piloting his social enterprise, who had trained and worked for many years
preparing food to meet a variety of culinary tastes. They conducted tastings and samplings in the
neighborhood, and that was when the neighborhood population really got excited about the new-
est arrival in their neighborhood. After tasting the new chef’s food, they started asking Rauch how
soon the Daily Table would open.
After getting to know the community, Rauch realized that his initial business model idea
wouldn’t fly. He needed to find a way to procure his own fresh produce, rather than basing his
business model on donations from supermarkets that want to get rid of produce nearing its best by
date. His customers were just not attracted to that model, and he had to listen to his customers.
After much head scratching and soul searching, Doug came up with a way. Today, his team picks
up fresh produce from bulk sellers, each morning. The same producers that sell bulk items to large
stores, always have a small amount left each morning that nobody buys. Daily Table purchases
these on a daily basis at discounted prices, and sells them at a fraction of the market value. With
this final iteration, Doug Rauch and the Daily Table were finally ready for business.
The development of Daily Table from idea to implementation took more than three years,
which is a common statistic in business planning. Entrepreneurs with great ideas often under-
estimate how long it takes. Even after implementation, it will take a while to break even. This
underscores the importance of planning and forecasting and analyzing your social, financial, legal,
and other risks. It also speaks to the importance of getting to know your target customer, finding
out what drives their decision making, what they really need from you, and what will get them
excited (Figure 5.9).
At the time of writing, Rauch is now piloting the first Daily Table in Dorchester, Massachusetts.
He aims to launch two more pilots before even thinking about how to go to scale. To him, the
most important thing is to demonstrate knowledge about how to effectively bring together the
need and the opportunity. In entrepreneurship, it is often the first entrant into the market who
learns all the lessons, whereas new entrants later take these lessons learned and achieve greater suc-
cess. According to Rauch, his goal is to establish a proof of concept, to be that first mover that gets
“clobbered.” His advice to social entrepreneurs is to “dare greatly.” “Don’t just nibble at the corner.
You have to inspire and aspire. Put your heart and soul in it, put yourself on the line. Challenge
the status quo—Be the irritant, the sand in the oyster that makes the pearl.”*
* Doug Rauch, speaking at Harvard T.H. Chan School of Public Health, Friday, February 27, 2015.
Chapter 6
Delivering Your Solution
Operations and Distribution

Developing a market strategy is not enough to get your solution across the last mile. Careful con-
sideration is needed on the nuts and bolts of operations and distribution. This is where many social
interventions have failed! In this chapter, we will focus on different distribution channels, processes,
and considerations needed. In the next few chapters, we’ll talk about different aspects of organiza-
tional foundation building, compare the financial viability of different options, and analyzing risk.
Just like we left no stone unturned in characterizing the challenge, we’ll leave no stone unturned in
finding the best possible way to make the implementation of your solution a success.
You may have heard the phrase “reaching the last mile” a lot. But what exactly does this mean?
In some cases, it may be physically the last mile—reaching locations that are logistically chal-
lenging to get products and services to. It’s the distribution costs that have prevented large global
corporations and/or central governments (among the other factors we discussed in Chapter 2)
from reaching the most marginalized populations with basic human needs and services. In other
cases, it may mean bridging the gaps in information and knowledge that prevent some people
from accessing solutions. And in others, it means finding creative ways to put together the differ-
ent pieces of the supply chain—the information and knowledge required to create demand, the
logistics required to supply the solution, and the payment or financing to make it all possible.
What Is Operations?
Management of the different pieces of the supply chain is what we are referring to when we use
the word operations—it’s the functioning of your social venture, the processes required to get to
the outcomes you’re aiming for. Operations refers to the day-to-day activities required to produce
and deliver your solution. These will depend on your distribution model and other aspects of your
multidimensional market strategy.
Operations are the processes required to get to the outcomes you’re aiming for.
111
Prototyping and pilot-testing an idea are completely different from rolling it out. How can you
create systematic processes through which you provide your social product or service to your tar-
get audience? This not only helps you ensure the results that are so critical to reaching your social
impact targets, it also helps you set up your venture in a streamlined way, minimizing resources
and maximizing output.
Here’s where it gets really juicy! Here’s where you tell us how you are actually going to do this.
Now, we’re starting to get into new components of the business planning process that you haven’t
reached yet in your journey. This is the nitty-gritty of the execution. So, let’s dive in!
Process Mapping
Process mapping refers to the clarification of how exactly the moving parts of your product or
service will flow between these different components to get to the final end goal. The result is liter-
ally a step-by-step description of your core operations, similar to a recipe or instructions manual
for your team.
This includes distribution. At the start of your journey, you defined the “last mile,” that miss-
ing gap that is preventing your end user from overcoming this social challenge. How are you going
to get your product or service across the last mile? The process map includes each and every step
taken from A to Z.
As your organization grows, you might end up having more than one process map for the dif-
ferent departments and subsections of your venture. But for now, let’s focus on your main opera-
tion, the primary product or service you offer. How is your social product or service produced,
how is it offered to the customer, who is involved at each step, where does it take place, and when?
This is how you map out your operations.
An example is shown in Figure 6.1.
You’ll notice that this process map describes a system providing a social service. A process map
for the provision of a product is much the same. Person X purchases ingredient Y. They hand it
Customer fills out Receptionist takes

Customer is
form with form and directs
Customer arrives at clinic greeted by
personal customer to
receptionist
information waiting room
Nurse reviews Receptionist checks When patient reaches

information and patient queue every top of queue,
Receptionist hands over form twenty minutes and receptionist directs
to nurse places customer in
informs patients in them to consultation
patient queue waiting room on status room
Nurse greets patient in Nurse makes diagnosis Patient is provided

Nurse goes through with information on
consultation room and asks for standard questionnaire for certain list of next steps,
description of reason for visit and takes vital outcomes, refers to medications, and
statics doctors for others follow-up
Nurse calls patient for If phone questionnaire If phone questionnaire

follow-up after x days is positive, problem is negative, patient is
(refer to diagnosis chart) has been resolved asked to come back in
Figure 6.1 Process map for community health clinic.

Delivering Your Solution ◾ 113
over to person Z, who takes it through procedure A…all the way to the distribution, transporta-
tion, and customer service. Where do the customers go to, who do they buy it from?
This is just one simple example using a basic word processor diagram, but you can also use
more specialized software and symbols. There are also free web-based tools that you can use to
create more sophisticated flowcharts, and many process mapping softwares provide a free trial in
case you’d like to try it out for your own process map!
Process maps can help you make sure that nothing falls through the cracks; they also help you
chart out the resources you’ll need and the room for growth. Process maps need to be revisited
in the future as your organization grows to figure out what redundant steps can be eliminated,
enhanced, or improved. They may also change as you refine your distribution channels. Going
into the nitty-gritty details of how it will all work will help you ensure that you don’t drop the ball
when it comes to delivering.
Distribution Models
The simplest model of distribution entails taking the same package—your core product or service—
and offering it to more people. To do this, you’ll need to carefully think through the processes this
would entail. Do you have enough resources to reach more end users? How will the increased opera-
tions affect and be affected by economies of scale? What geographic areas do you aim to cover, and
will you need to tailor your package to the local context as you spread? Even if you have created a
standardized package that does not need tailoring and can be replicated across subpopulations and
geographies, you may have to customize your marketing, pricing, or other aspects that vary across
location. In this chapter, we will cover all of these considerations, providing information for various
options you may be considering. Depending on your product or service, you may pick and choose
the most relevant components for you.
Expanding Your Reach—Different Mechanisms

Once you’ve assessed the different variables and factors for success through pilot testing, it’s time
to assess the various mechanisms available as options for reaching your audience. How will you
actually carry this out? Before we explore different options, let’s put a disclaimer out there. Here’s
how this is not going to go down: Don’t expect to read through the various models and examples
like a menu, pick an option, and hit the ground running. Do expect to try out different options
and analyze different scenarios to assess what the (1) impact will be and (2) resources needed will
be for each of the options, before you start.
This is one of the major differences between thinking about scale as an afterthought—as in
“okay now that it works, how do we scale it?”—and being a strategic social entrepreneur who sets
out to create that measurable change from the start. Let’s look at some different options now, and in
the next two chapters, you can start building an organizational framework to assess which options
work best for you, and as a result, you may just end up creating your own new way of doing things!
Don’t forget, operations and distribution are yet another step on the innovation ladder.
Expanding Central Production Volume

The first option is to keep doing what you are doing, and do more of it. Did your pilot provide
your product or service to 100 people to test your processes and outcomes? The next step might
be to offer it to 1000 people. How do you decide on the numbers? This depends on the need
and the market, the resources available to you, and the nature of your intervention. Before you
expand, it’s important to evaluate your results from the pilot. What could you be doing better?
What worked and what didn’t? Multiple pilots may be necessary before you can go to full scale.
Don’t make these decisions alone. Your team and your board can help provide their perspectives
from their viewpoint, which will be different from yours. Your team might have different views
to offer from the battlefield, and your board might have different views to offer from the bird’s
eye view.
Expanding your central production volume can carry the advantages of increasing efficiencies
and reducing costs per unit produced or transaction served. Key challenges to look out for are
building systems to maintain quality assurance and creating feedback loops between management
and the frontline. On the former, hiring team members specialized in monitoring and evaluation
(M&E) and creating a data management and analytics platform for them can help you ensure
consistent quality. As we’ll discuss in the next chapter, you’ll want to monitor both your opera-
tions (how things are done) and your outcomes (the results you are getting). On the latter, make it
a priority to ensure that if expansion of the central unit is the route you take, this does not result
in a heavy, bulky, bureaucratic organization.
The important thing to note here is that a natural characteristic of economies of scale is
that at one point, they start going back down. Economies of scale increase until you reach your
optimal production level, and then they decrease. In commercial business, one might just stay
at that optimal production level. But in a social venture, you probably won’t want to stop there!
You’ll need to think about what to do next to reach end users that you are not yet serving—
either open a new production unit or a satellite branch or explore further ways of replicating
your success.
Opening New Branches

Replicating your pilot by opening new branches at various locations, rather than—or in addition
to—increasing operations at the original location is also an option. As we will see in the Aravind
case, even though they were successful in achieving economies of scale in their hospitals, they
also had to venture out and open new branches to reach people where they were. New branches
might be very similar to the original branch or might have different characteristics. They might
offer modified products or services or additional products or services. This depends on the nature
of the population you’re trying to reach, the influence of local context on the nature of your work,
and the test results at each location. Don’t forget—you have to test the market before each step! In
many ways, it’s like going from one pilot to several new pilots (Figure 6.2).
Figure 6.2 Replicating your pilot.

Franchising
Franchising means that rather than trying to produce more yourself or serve more yourself, you
partner with other organizations to replicate your model. In the commercial sector, you can fran-
chise your venture to an individual willing to take it on and build it from scratch. In the social
sector, it is recommended to franchise to an existing organization that has already determined
viability as a social purpose organization. By viability, we mean that the organization has sustained
itself over time, demonstrated social impact, and built trust in its community. This organization
will then take on the responsibility of manufacturing or implementing your product or service in
its community. In most cases, you will receive a franchising fee from the organization, which it
will pay out of the revenues generated from your product or service. You will be responsible for
continuous guidance and training to ensure consistency and quality in your brand, its output, and
the social outcome that is your ultimate goal.
The decision to franchise might come later in the game, or you might design your social
venture around this model from the start. Advantages of franchising are that it requires fewer
resources to deliver your solution to a larger audience because the franchisee is carrying the bur-
den. It also allows you to leverage existing networks, relationships, and systems in communities
you have not entered yet. Key challenges to look out for when franchising include the importance
of selecting a franchisee with a mission that is aligned to yours, and an organizational culture
that is amenable to replicating your impact. If your organization invites innovation and creativ-
ity from its staff but your franchisee does not, then it is not likely they will be able to replicate
your model. If your business model requires you to operate in a lean and efficient manner to
reduce costs, but your franchisee has high administrative costs and operates inefficiently, then
you need to diagnose that from the start and step out. Another key challenge is the importance of
recognizing that franchising requires you to have the time and capacity to provide management
guidance and training. You have to first perfect what you’re doing at your pilot site and have your
operations running smoothly there before you replicate to the first franchisee site. So franchising
is not something that happens early on in a social venture. However, the same could be said for
any mechanism of expansion!
Microfranchising
Microfranchising is a distribution model that differs from the social franchising method described
above. As its name suggests, microfranchising entails much smaller units of replication. Rather
than franchise the venture as a whole, it is usually the last mile distribution that is franchised. That
is, your core organization is still responsible for a large portion of the operations and production,
while the franchisee is responsible for interfacing with the end user. The franchisee is usually an
individual or, in some cases, a small organization.
The microfranchising model has been used to provide access to basic goods and services at
affordable costs and foster job creation. Microfranchising examples from emerging economies
around the world include SPOT taxi in India, Fan Milk in Ghana, Natura in Brazil, Kegg Farms
in India, and BlueStar Ghana and Coca Cola’s Manual Distribution Centers in Africa.* These are
traditional franchises that have fostered job creation and asset creation at the base-of-the-pyramid
microchain. Social ventures have also employed microfranchising to provide social goods and
services around the world. Examples include VisionSpring Eyeglasses, Living Goods, HealthStore
* www.templeton.org/newsroom/in_the_news/docs/091215_frontiers_markets_summary.pdf.
Foundation, PlayPumps, KickstartPumps, Drishtee, and Grameen Phone. Microfranchising may

be seen more as a business model than a distribution strategy since it’s something that needs to be
decided much earlier on in the process. However, the same could be said for any of the distribution
strategies discussed in this chapter.
Nonmonetized Methods
Another option available for your consideration when choosing your distribution methods is shar-
ing your core package with other organizations without incorporating any financial transactions.
This can be employed in combination with one of the other previous methods to expand your
reach through the work of others, even if it’s not under your structure or your brand. One way
to do this is to create an open-access platform where people can access the knowledge and skills
needed to provide your product or service to their own end users. You can also license your work
free of charge through legal tools such as those provided by Creative Commons, which allow you
to set conditions on the use of your work.*
Some social ventures take this one step further and also provide training to other organiza-
tions interested in applying their model, to help ensure that the desired social impact is achieved.
These kinds of options may not work for everyone, as they require you to have a robust revenue
stream from other sources. However, some organizations have made it work by diversifying their
revenues—for example, adopting a hybrid model where revenues from one market support activity
in another market, or by complementing revenue-generating activity with fundraising, or through
financial support from their board. In some cases, it could also serve as a marketing tool to attract
enough paying customers to compensate for the freely shared material, thus balancing out your
venture’s financial viability. In these cases, social impact growth takes place at a higher rate than
financial growth, but the organization remains financially viable.
Success Factors across Distribution Models

Whatever distribution model you end up choosing, make sure you’re aware of the control knobs
you can adjust to influence your reach. While these differ by organization, success stories from
around the world suggest that there are a few that are important for you to think about no matter
what field you work in and no matter how you end up setting up your social venture.
Define Your Core Package

Part of evaluating your pilot is identifying the main factors responsible for creating the outcomes
you’re looking for. These make up the core package that you want to get to your target audience.
The contents of your core package are determined by the results of your pilot testing and are
informed by iteration after iteration and prototype after prototype of your product or service.
Until there is further evidence from your future results down the line to suggest that they
should be modified, consider them your “nonnegotiables.” The next step is to figure out how to
get this core package to as many people as possible, within the context of your theory of change.
* http://creativecommons.org.
Standardize
In many cases, in order to expand your reach, you need to standardize the processes by which you
produce and offer your core package.
What exactly are the elements that have proven to be responsible for the social impact you are
reaching for? How can you ensure that these elements are effectively delivered to each and every
customer as you grow and expand distribution? As we will see further in the chapter, not all ele-
ments of your social venture will be standardized—many will be tailored and customized—but
before you design your distribution model, it is essential to determine what needs to be maintained
across your offerings and how to ensure consistency in your operations.
Standardization can take place through training, through automating, and through quality
control. Creating protocols, checklists, and procedures focused on ensuring the key characteristics
of your core package that are tied to your social impact is one way to do this.
Automate
One way to standardize and to boost your organization’s ability to offer its core package as effi-
ciently as possible in general is to automate certain processes. The key is to select the right pro-
cesses. This helps you open up resources (people, time, funding, physical assets, and facilities) to
take on larger volumes and serve more people. Not all processes can be automated, but it is worth
your while to spend some time figuring out which steps can be automated. We’re not talking about
the people part here! We’re talking about steps that take away from the people part.
As an easy example, data entry and analysis are usually low hanging fruit, inexpensive steps to
automate. Rather than have your monitoring take place on paper, have it take place electronically,
so that data do not need to be manually entered into a system. At each site, you can record the data
in an electronic system (whether using a phone, tablet, or other computing device), which allows
it to be added to your database immediately. Data analytics software is easily accessible and can
help you identify the trends in your data. This will help you determine which sites are performing
well, whether you are reaching your social impact targets, what equipment or inventory you need,
and other crucial factors needed to optimize both the social outcomes (where you’re trying to get
to) and the operations (how you’re getting there). Many other “back-end” processes of your man-
agement systems, such as managing supplies, are logical parts of your social venture to automate.
They can then be overseen and interpreted by a qualified person, but there’s no need to waste time
and talent and overhead on steps that don’t need to be taken.
Shorten the Last Mile

What if a part of designing your delivery model around reaching the last mile was finding new
ways to make that last mile shorter? Might you be able to innovate your supply chain to excel in
distribution? How can you turn the distribution challenge from being your enemy into being your
best friend? Let’s look at some examples of how successful social ventures have done it.
Decentralizing the production unit is one way some successful ventures have done it. Rather
than having a central headquarters churning out the product (like a factory) or offering the service
(like a hospital), social ventures aiming to reach the most marginalized populations have brought
the actual production unit or service unit to those populations and created the social good there.
Aravind eye care system is a good example, which we’ll read more about in the case study.
Determining whether this might be an option for you requires testing, like anything else. It
took Aravind several rounds of trial and error before they reached their vision centers model. At
the time of writing, it is being tested for effectiveness and scalability, and the next iteration might
lead them to a new improved model. A second example is the host of new social entrepreneurs
around the world aiming to make sanitary pads for adolescent girls and women more affordable,
available, and accessible. The theory of change behind these new social ventures is that lack of
access to affordable sanitary pads in many countries leads adolescent girls to miss school days, and
that making sanitary pads more accessible would improve their educational outcomes, with all
the ripple effects that entails. These social entrepreneurs realized that manufacturers of these pads
do not find it profitable to sell in rural areas because the transportation costs are so high. They
designed new machines to produce high-quality, affordable pads and instead of producing the
pads themselves in a central factory and facing the same distribution/transportation dilemma, they
instead provided the machines to women in decentralized locations. These women then became
the manufacturers and distributors. This model is currently being tested by social entrepreneurs
in Rwanda (http://sheinnovates.com), India (www.newinventions.in), and many other settings.
Foster Local Leadership

These manufacturers are not the only examples that relied on local capacity to build a network of
production and distribution. HLC made the teachers the business leaders at each learning cen-
ter site by recruiting young women from the surrounding villages, training them in HLC’s core
package, and then giving them the responsibility to manage the center and recruit the end users
(children and their parents). This is another form of decentralization! Nuru International, which
will meet in the next chapter, also relies on recruiting and training local leaders. The local leaders
then take the helm of building Nuru’s program, monitoring and evaluating social impact, and
running the operations after Nuru’s core staff exited. Without such a model, Nuru would not be
able to scale beyond its first site. Thinking back to the waste pickers’ association we read about
in Peru and other locations around the world, they formed alliances and unions and spread their
impact by finding local leaders who could serve as catalysts in both direct service and advocacy for
improved laws and policies.
Whatever your operations entail and your distribution model calls for, the experience of others
before you shows that if you find and work with the local entrepreneurs and leaders, this could be
your best shot at reaching your end users.
Decentralize Operations
The previous examples point to the importance of decentralizing operations, one through manu-
facturing and sales, the other through working with local leaders. There are yet more ways to
maximize this beyond manufacturing, distribution, and recruitment. M&E is yet another com-
ponent of your operations that you can decentralize. HLC exemplified this by recruiting and
training field coordinators to conduct the M&E of the learning centers, rather than conducting
this step from the central headquarters. This streamlines the process and lowers cost, just like
the local manufacturing lowered costs by eliminating the need for transportation and warehous-
ing. More importantly, it increases the “surface area” of the interaction between the team and
the end user.
Do you remember in middle school science how we learned about the surface area of an object,
through which materials like air or water can be absorbed or transmitted? The surface area of an
organization can be thought of in the same way! The more opportunities and surfaces built in for
interaction between you and your end user, the better. You don’t want to be a tight round sphere
that is centered upon itself; after all, you were built from the ground up, so it’s important as you
grow that you don’t lose that important touch.
Even communications and marketing will be optimized through decentralized teams because
the content and channels can then be more finely tuned and tailored to the local setting. This
includes customer service and feedback. Aravind vision centers are a prime example of the inside-
out approach, rather than outside-in. After relying on satellite mobile vans to go out into the
community and bring people back in to the central hospitals (outside-in), Aravind’s team realized
that a more effective way to reach more people would be to take the services to them (inside-out).
Today, they are focusing more on growing the number of decentralized eye care units (see more in
case study at end of chapter).
Tailor to the Local Population

Further beyond the local distribution, management, and communications, there are ways to tailor
your offering to the local population to ensure that you are able to optimize impact wherever you
spread your reach. As your organization grows and more distance is created between the central
unit and the decentralized unit, you need to leave a certain degree of freedom and flexibility to
tailor both what you are offering and how it is offered.
Let’s look more closely at customer service as an example. While it is critical that all staff
members are trained in the core components of your model and its implementation, they also need
the skills and competencies required to personalize your offering. This also applies to nonstaff
members of your supply chain. Some ventures choose not to hire but rather to contract out certain
elements of their supply chain. An important way to maximize your social impact is to ensure
that each step of your supply chain is integral to your mission, from the suppliers to the vendors.
This gives your venture the power to adapt and respond to local customs, preferences, and needs.
Even behaviors, mannerisms, and social protocols adopted by staff members interfacing with your
customers can be tailored to provide the best customer experience possible.
Leveraging Existing Channels

What are the existing distribution channels that exist in the community you’re working with?
What products do they already have? Regardless of your distribution model, you can always find
ways to creatively piggyback on existing channels rather than starting from scratch in creating
your own. This can work in various settings—from dense urban areas to remote rural areas. Each
setting has its own challenges but also its own opportunities!
As always, the key is to test out different theories and see what part of your model delivers
impact and what part actually doesn’t so much. A striking example is Cola Life, which designed
a product for oral rehydration therapy, aimed at combating diarrhea, which is a leading cause of
childhood mortality in many areas. The initial idea behind Cola Life was to package the product
in pods, which were shaped to fit in the spaces between cola bottles delivered to small shops in
both cities and villages. This was inspired by the fact that you can buy Coca-Cola in every village
in Africa, but you have to travel several kilometers in most cases to access health products through
rural health centers, which are often out of stock when you get there! The packaging idea sounded
brilliant, but when the team tested it, only 4% of the rural retailers actually used the cola crates
to transport the product. So it turned out this was not the key to their success; however, the idea
of creating and selling this product through rural retailers just like Coca-Cola does was in fact a
success. People were willing to pay for it, and it increased access by bringing the product to the
retail shops. The team is still constantly finding new ways of packaging their offering to reduce
costs and tailoring the contents based on results from field tests which gave insight into how it was
being used and what the customer needed—and didn’t need.*
Interview Box. Thulasiraj Ravilla, Executive Director,

Aravind Eye Care Systems
TC: We have seen a lot of success stories coming out of India on

scaling social ventures. Do you think that the lessons learned
from Aravind Eye Care Systems might be applicable to India
only, or can they be generalized to other settings?
TR: India is certainly a large market amenable to high-volume
systems, but our experience shows that the models devel-
oped here can be adapted to other settings too. Our team has
already helped implement similar models in many countries
around the world. For example, in many African countries,
the doctor population is low, and this model can increase
access to basic eye care services.
TC: What about in other sectors? Do you think your model is applicable beyond the
healthcare sector?
TR: Yes, I do think it can be applied across sectors. My only warning is that adopting a cross-
subsidization business model may not be the right fit if your social product or service is
not equally needed by paying and nonpaying customers. Eye care is needed by both and
is especially sought after by paying customers; but other services may not be.
TC: What other pieces of advice would you like to share with aspiring social entrepreneurs?
TR: Most importantly, social entrepreneurs need to recognize that their customers are
smart and know what’s good for them. It’s about the process and the prices, but most
importantly about the people.
Photo Source: Schwab Foundation Social Entrepreneur Profiles.
Strategic Partnerships
In order to find these results, Cola Life needed to partner with private sector, government sector,
NGOs, international agencies, and universities to design and test their ideas. Ciudad Saludable,
whom we met in Chapter 3, now operates in 11 countries at the time of writing but emphasize
that they did not—and could not—start from scratch in each one. They found other entrepre-
neurs who were already working in those settings, and joined forces with them. Strength is in
numbers— and you’ll find that out very painfully when you start crunching your numbers! If
you’re going to reach the people you need to reach and make your solution as affordable as pos-
sible while remaining financially viable, you’ll need to be very creative about how you’re going to
leverage resources along the way.
* http://www.colalife.org/2014/02/11/seven-of-the-headline-findings-from-the-colalife-trial-in-zambia/.
Your Biggest Resource: Your Team

Now that you have a more concrete and detailed idea of what needs to be done, you need to make
sure you have the right people surrounding you to execute it! Your starting team and your design
team might not necessarily be the same people who will launch your venture with you. This is one
of the hardest parts of building a social venture. It depends on who’s invested and who has the
right skill set.
By “who’s invested,” we mean who is in this with you for the long haul. You will get financial
investors at a future stage to fund your venture, but that’s not what we’re talking about right now!
If you are going to do this, if you are really committed to make this happen, then you may likely
not get paid for a while. There will be a lot of sacrifices you will have to make. You need to make
sure that the people who have been by your side up until now are committed to making those
sacrifices.
By “who has the right skill set,” we mean who can be a true partner in complementing your
strengths and weaknesses. You will get a lot of compliments for your work, but that’s not what
we’re talking about right now! You need to think about the competencies needed to build a venture
and make sure your founding team includes those competencies: someone who can be outward
facing and build bridges, someone who can be inward facing and build systems, someone who’s
good at the business side, and someone who’s good at the programmatic side.
It’s time to start thinking about who is going to take this dive with you. The composition and
structure of your team moving forward is one of the most critical factors which will determine
your success. Finding the right people is not easy. You’ve already done it once when you first
started, so go back to those rules. Start within your organization, company or university, or other
existing social networks. You might stick with your starting team—chances are there will be a
huge overlap. But not everyone might want to continue, and you may need to recruit one or more
others through external professional networks.
Building the Team

A common mistake that social entrepreneurs make while building their venture is trying to
do everything themselves. When you first begin, this is naturally what happens. You go out
into the field to collect information, learn from others, and get input from stakeholders. You
meet with potential funders, with scientists and experts who have researched your topic, with
practitioners who can help you produce and measure the impact you’re after. You find people
to support you in aspects you’re not able to do on your own, such as coding or manufacturing
or delivering technical services like medical care, education, etc. You eat, breathe, and live your
social mission. And for this very reason, you’re often hesitant and scared to build the executive
team you need. To let go of the reins or share responsibility with others, to depend on others,
to relinquish control, and to create the space for someone other than you to take action can be
a daunting proposition. But if your goal is to scale your impact, then you need to think ahead
and act accordingly.
Envision yourself 10 or 20 years down the line. Where do you want your organization to be?
At that point, how many people are working in this organization? What are the roles? Once you
have this picture of what you want the organization to look like in the future, you can ask yourself
what is needed to get there. Someone is needed to help you recruit, hire, train, and manage future
team members. Someone is needed to help you manage finances. Someone is needed to help you
liaise with others.
No entrepreneur can possibly foresee on their own all the different roles and positions that will
be needed as their social venture unfolds. This is why it is recommended for you to focus on think-
ing about the executive backbone, which is composed of the core functions. Then, you can work
with these core members to determine how their future teams need to grow. There is no formula
for the composition of an executive team; it varies from organization to organization depending
on the needs and functions. However, there are certain roles that are found more commonly than
others, and it may be helpful for you to familiarize yourself with these and then tailor them to
your needs.
Composition of the Executive Team

Most often, one of the cofounders takes on the role of the CEO. This is the person who carries
forward the mission of the organization, serving as its representative. The chief executive is the
face of the organization and works to garner support from others and also is most often the person
who is held accountable for the organization’s performance. This is why it is crucial for the chief
executive to surround herself/himself with the right team to build the organization.
The chief operating officer (COO) is often known as the right hand of the chief executive. This
is the person who makes sure that the operations of the organization run smoothly and that it is
able to produce the product or service it provides to its target customer. The role of the COO often
involves building management systems and administrative systems to ensure that the organization
runs smoothly; in many cases, it also may initially include human resources (i.e., ensuring that
the right personnel with the technical skills to produce your organization’s product or service are
recruited, trained, and managed) until an human resources person or team is hired.
The chief financial officer (CFO) is responsible for the financial bottom line, which includes
financial management and reporting, financial modeling, and pricing. Often, there is also a chief
communications officer or chief marketing officer (CCO or CMO), who is responsible for getting
the word out about the organization and getting feedback in. This includes building an internal
and external communication strategy, overseeing social media, following up with individuals and
organizations who have a vested interest in the company, building the base of customers, support-
ers, and other stakeholders. While the chief executive is the main proponent of the company and is
responsible for breaking new frontiers in terms of getting the word out and building relationships,
without a communications or marketing officer, the growing network of relationships is challeng-
ing to manage and optimize.
Last but not least, a chief program officer (CPO) of some form is needed. This is the person
who manages and optimizes the social impact of the organization in terms of technical program-
ming. Thinking back to your theory of change, this is the basis of your programming, i.e., the
planning and implementation of the products and services you provide, how you provide them,
to whom, and what they consist of. As your organization grows, so will its programs, products,
and services. If your organization works in health, your CPO may well be known as the CMO, or
chief medical officer. If your organization works in technology, then this person will more likely be
known as the CTO, or chief technology officer. Depending on your topic area, this is the person
who focuses on the subject matter expertise and ensures that all programs, products, and services
are technically robust and are built to maximize the impact to your target audience.
Different organizations refer to these roles using different nomenclature; for example, in some
organizations, the chief executive is referred to as an executive director, while in others, this role is
referred to as the CEO. The COO, CFO, CMO, CPO, etc., could also be referred to as a general
manager, director of finance, director of communications or marketing, and director of programs.
Also, not all organizations have the exact same structure and combination. Each organization
builds its own team according to its own needs and functions. You have a creative license to draft
the job descriptions and titles that you need!
At the end of the day, make sure all the core competencies required to build your venture are
there: in most cases, you need someone with strong people skills to champion the organization,
someone with strong management skills to build processes and ensure that everyone is using their
time well, someone with subject-specific skills to make sure you are at the cutting edge of your
field, someone to make sure your organization has strong financial health, and someone to make
sure that your internal and external communications are helping you reach your goals.
Do You Have to Be the CEO?

Do not make the assumption that the founder of the organization necessarily needs to serve as
the chief executive. The founder may instead hire someone to play this role. The chief executive is
someone who has long-term vision and can carry the team forward toward that mission, building
partnerships and accruing supporters along the way. Traits to look for in this person are strategic
thinking, the ability to not get lost in details, and the ability to forge alliances and win supporters.
Sometimes, the founders find that they feel more comfortable playing a more technical role and
need to recruit someone to be their external pioneer and people-person. Some social entrepreneurs
find that the more their organization grows, the less time and opportunities they have to interact
with their target audience because of the outward-facing nature of the chief executive’s role, and
they prefer to recruit someone else to play this role.
Whatever your preferences, make sure that you have one person for each of the key roles
outlined previously. Of course, your set of executive team members may not exactly follow this
general outline because your organization has its own unique needs and attributes. When you first
start, one person may be playing more than one (or all of) these roles. The important thing is to
revisit your plans for the future and think about where you want to be further down the line and
envision what roles will be needed when you get there, and before you get there, in order to achieve
these goals. Make sure to invest the time and resources getting the right people on board who can
help you get there. It might be tempting to plug along in your work thinking that you can’t afford
the luxury of time needed to find someone else to take the load off you because of the urgency of
the work itself. But taking this time will allow you to have a larger impact in the future, and you
are most likely harming your own mission if you don’t prioritize finding the right team to help
you carry your venture forward.

Let’s take a moment to step back and reframe. In the last couple of chapters, we’ve designed our
product or service with the end users and conducted market research to assess who we’re targeting,
what our value proposition is to them, and how we’re going to get this solution into their hands.
In this chapter, we focused on how those plans will be operationalized. How will that solution
be delivered? We explored various options for distribution channels, to get products and services
across the last mile. Last but not least, we started thinking about how to put together the executive
team to take this forward.
In the next chapter, we’ll talk about impact metrics. Where are we going with this, and where
do we hope to reach? Then we can complete our business model by assessing costs and revenues
and conducting a risk analysis. After that, you’ll be ready to go out there and start securing
resources to help make all this happen!
Exercise: How Will You Deliver Your Solution?

It’s time to put down on paper your thoughts about operations, distribution, and team:
1. Draw out your preliminary process map. What steps will be needed, from sourcing raw
materials, to assembling them, to delivering your solution to the end user? Who is respon-
sible for each role?
2. What distribution channels are viable options for you, in the context you’re working in?
What are the pros and cons of each one? What information do you need to collect to figure
out what will deliver the highest impact possible at the lowest cost?
3. What key positions will be necessary in developing your venture further? Were there any
core operational fields that you identified in your process map? How many of your team
members are already present from your starting team and your design team, that fit these
roles? Do you need to recruit new ones?
CHAPTER SUMMARY
◾◾ A critical part of designing your solution and developing your market strategy is figur-
ing out the nuts and bolts of implementation. In this chapter, we talked about how to
design your operations, distribution, and team.
◾◾ Operations are the processes required for your social venture to function. These are
the day-to-day activities required to produce and deliver your solution. A helpful way
to visualize what your operations look like is to sketch out a process map. This is a
step-by-step description of the core operations behind your social venture: the where/
when/how of all that needs to happen.
◾◾ Your distribution model refers to the mechanisms and set-up of your venture to reach
the last mile. Challenges in developing your distribution model include cost consider-
ations, physical logistics and transport, and information gaps. Common models used
by social entrepreneurs include centralized production, branches, franchising, micro-
franchising, and open sourcing.
◾◾ Success factors across distribution channels include the importance of knowing what
aspects of your operations to standardize and automate, shortening the last mile, fos-
tering local leadership, decentralizing where possible and tailoring to the local popu-
lation, and leveraging existing channels. This requires strategic partnerships to build
value chains and leverage local resources.
◾◾ Your team is one of the most critical success factors moving forward. The composition
of your executive team depends on how your social venture operates—most teams
need an outward-facing chief executive, an inward-facing operations lead or general
manager, a financial lead, a marketing and communications lead, and a technical lead
specialized in the subject matter you’re working in. As you complete your business
plan in the coming chapters, you’ll need to make sure your team is complete too.
Example Social Ventures from This Chapter

(only a sample of the microfranchising examples are included, as many were listed)
Company profile: Cola Life, www.colalife.org.

Open-source approach licensed under Creative Commons, registered in 2011 as UK charity.
Product/service: Antidiarrhea kit containing oral rehydration salts (ORS), zinc supple-
ments and soap, packaged in an easy-to-use kit, distributed via existing private sector supply
chains using the same principles and networks as soft drink sellers and other producers of
fast-moving consumer goods (FMCGs).
Goal: Save children’s lives, improve caregivers’ access and knowledge of health issues.
Diarrhea-related dehydration is a leading cause of under five mortality in developing
countries.
How it works: Cola Life studied Coca-Cola’s techniques and applied them to the design,
marketing, and distribution of a life-saving diarrhea treatment kit built on established global
recommendations. This was achieved through the twin approaches of redesigning a basic
product to better meet the needs of customers, and the development of existing distribution
channels to remote communities, already used for fast-moving consumer goods. This proved
more important than the original Cola Life concept of piggybacking the product within cola
crates—although that original idea helped unlock other innovations. Preliminary results
include increased coverage from <1% to 45% during the pilot year, improved preparation of
ORS from 60% to 94%, and reduced distance to ORS and Zinc access point from 7.4 km
to 2.3 km.
Company profile: Living Goods, www.livinggoods.org.

Founded in 2007, registered as U.S. 501c3, employs hybrid model operating in Uganda,
Kenya, Zambia, and Myanmar at the time of writing.
Product/service: Network of health entrepreneurs who go door-to-door to teach families
how to improve their health and wealth and sell life-changing products such as simple treat-
ments for malaria and diarrhea, safe delivery kits, fortified foods, clean cook stoves, water
filters, and solar lights.
Goal: To lower child mortality, improve nutrition, and create livelihoods for thousands of
enterprising community health workers.
How it works: Living Goods’ model empowers health entrepreneurs through a direct-
selling approach of “Avon-like agents,” to deliver life-saving products to the doorsteps of
the poor. Community health promotors (CHPs) live in communities they serve and earn an
income by providing products and services that improve the lives of their customers. CHPs
visit families in their homes to check children’s health, support pregnant mothers, and advise
parents on improving at-home health practices. Customers can call their CHP day or night
to help when a child is ill. Living Goods partners with district health teams, Ministries of
Health, and other NGOs such as BRAC.
Company profile: KickStart, www.kickstart.org.

Founded as ApproTech in 1991, later became KickStart in 2005.
Product/service: KickStart designs, develops, and promotes affordable irrigation tools that
poor farmers in Africa adopt to no longer wait for the unreliable rains, but rather make their
own rain.
Goal: To lift millions across Africa out of poverty by creating a sustainable solution to the
rural poor’s most important need—a way to make more money.
How it works: KickStart uses farmer-centered design to develop their irrigation products in
Kenya. To sustainably distribute and sell the pumps and spare parts to farmers, KickStart
developed a private-sector supply chain throughout Africa. Farmers who adopt these pumps
go from not growing enough food to feed their family to growing enough year round to start
a profitable business selling their surplus crops. These low-cost ($70 and $170) pumps enable
farmers to increase their annual farming income through irrigation by ~500%—from $150
to $850. Additionally, through investments in livestock and poultry, and the ability to afford
better seeds and fertilizers, farmers increase their total net annual household income by
~400%.
Company profile: Vision Spring, www.visionspring.org.

Founded in 2001, formerly Scojo Foundation.
Product/service: Accessible and affordable eyewear to restore vision for a productive life.
Goal: Strengthen the economic productivity of individuals by up to 35 percent, ensure stu-
dents learn, and working poor can work, through corrected vision.
How it works: Vision Spring is testing innovative business models to forge new distribution
channels for the delivery of affordable, high-quality eyewear. Vision Spring began with a
microfranchising approach with individual sellers and evolved into a franchising approach
with organizational partnerships, later taking a step further to test out a referral system with
optometrist hubs.
Company profile: Aravind, www.aravind.org.

Founded in 1976, India.
Product/service: Network of eye health care centers providing affordable high-quality eye-
care services.
Goal: Eliminate needless blindness through hospital services, community outreach, educa-
tion and training, research and mentoring other eye hospitals.
How it works: Aravind eye care centers treat high patient volumes and offer patients the
option to pay the market rate, a subsidized rate, or no fee at all for their services. To address
awareness challenges among the patient base, Aravind opened mobile eye screening camps,
which built trust and generated demand. Aravind leadership attributes success to keeping
costs low, decentralizing services, training in-house all the clinical staff, and providing
high-quality services equally to both the poor and rich.
Case Study: Aravind

Aravind Eye Care System started out with an 11-bed hospital inside a home in the Tamil Nadu
state of India. Founded by Dr. Govindappa Venkataswamy (Dr. V), an eye surgeon who was
employed by the government for many years and there he initiated the mobile eye camps. The
business innovation was based on his experience of more than two decades at the town, state, and
national levels. The mobile eye camps that Dr. V had led for so many years had focused largely on
cataract surgery to prevent blindness in the older adult population, but over the years, he noticed
other causes of blindness that could be prevented, such as nutritional deficiencies in children,
which led him to start India’s first residential nutrition rehabilitation center.* By the time he
reached the mandatory age of retirement from government service at 58, Dr. V had performed
over 100,000 eye surgeries, trained hundreds of young doctors, and managed countless commu-
nity outreach initiatives. He asked himself why, when the technology and knowledge existed to
prevent blindness, were there still millions of untreated patients in India. In a country with one
government hospital for every 2 million people, Dr. V asked himself whether it was possible to
provide cataract surgery at a cost most people could afford.
Together with his family, he formed a trust which allowed him to found the first Aravind
eye hospital. Records of the start-up phase recall challenging days for many years. To start, the
founders took a risk by self-funding, which involved mortgaging Dr. V’s house, selling family
jewelry, and pooling their life savings. This was further compounded by obstacles that resulted
from limited knowledge of business planning, costing, and budgeting.† At the start, the founding
team, which was composed entirely of medical doctors, was responsible for all administrative and
maintenance tasks—down to cleaning the patients’ rooms and restrooms.
At the time, there was a great need for cataract surgery, but low demand. This may sound
counterintuitive, as a reasonable assumption would be that low treatment rates were due to lack of
supply, rather than lack of demand. While lack of supply was certainly a reality, with only one eye
doctor for every 100,000 people—and many districts without any doctors at all—understanding
and acceptance of eye care treatment were also a challenge. Many people were not aware that
blindness could be prevented or cured, and many were afraid of surgery, leading to a poor response
to outreach efforts. Other challenges included the multiple costs of eye treatment: not only the
cost of surgery, but also transportation, time, lost wages, and the need for food and accommoda-
tion, not to mention the anxiety and mental costs associated with surgery.
Eye screening camps were Aravind’s way of addressing these challenges, by visiting communi-
ties to provide information and support, including transportation to the hospital and back as well
as surgery costs, food, and medication. The camps allowed Aravind’s team to reach out to patients
in rural areas, building awareness and trust, and generating demand.
Aravind’s business model involved providing a menu of price point options to patients arriving
at the hospital. Patients could choose to pay either market rate or a subsidized rate or no fee at all
if they could not afford it. All patients would receive the same clinical services regardless of pay-
ment and the same quality. Staff rotated and alternated between paying and nonpaying patients to
ensure an equal level of quality for, and understanding of, all patients’ needs. The key to financial
sustainability was twofold: to serve high volumes of patients, which would decrease the cost per
* Mehta, P., & Shenoy, S. (2011). Infinite Vision: How Aravind Became the World’s Greatest Business Case for
Compassion. Berrett-Koehler, p. 65.
† Mehta, P., & Shenoy, S. (2011). Infinite Vision: How Aravind Became the World’s Greatest Business Case for

patient, and to have enough paying patients to balance out the nonpaying patients. Both targets
required building demand in the surrounding community and building systems to allow for maxi-
mum efficiency in dealing with high volumes.
The Aravind founders were able to innovate on the processes because they placed constraints
on themselves, which required them to find solutions that were out of the ordinary. Their con-
straints were as follows: “We cannot turn anyone away; we cannot compromise on quality; we
must be self-reliant.” Achieving these three goals simultaneously required them to keep resource
use at a minimum. An example referred to in the book Infinite Vision demonstrates the waste
mitigation and down-cycling common at Aravind. Bed linens no longer in use are converted
into tablecloths, and then into washcloths, going into multiple cycles of use. When the first
hospital was founded and resources were especially scarce, the team used to make their own
cotton swabs and cut packaging material into sponges. Today, resources are more readily avail-
able, yet the Aravind team manages to avoid unnecessary costs and increase the usage out of every
resource. Spare parts and repairs for medical equipment are managed by an in-house maintenance
team, which implements cost-cutting measures such as manufacturing locally made spare parts
and identifying local substitutions and innovating ways to safely reuse expensive equipment that
would otherwise be used once and discarded.
An important factor in building trust to grow the customer base was no hidden costs. Anyone
who has ever been to a hospital or a bank can identify with this. Aravind’s team did not add
charges for each test or service added but charged only one consultation fee, which was valid for
up to three months if the patient needed to return. The fee for outpatients is 50 rupees, which is
the equivalent of less than one dollar. Amongst those coming directly to the hospital, the paying
customers outnumber nonpaying customers by 3:1 for outpatient services and 2:1 for surgery.
The price was set by the market, and the costs were lowered to the degree that revenues would
exceed cost. Doctors were paid a fixed fee rather than a per-patient fee so that when they treated
large volumes of patients, the profit went back into the organization. To make this all work, inten-
sive monitoring and scrutiny were required on both the cost front and the quality front. The tiered
pricing system expanded and diversified the customer base, serving not only those who can’t afford
to pay but also those who can afford it and have a choice on where to get treated. This model would
only work if the highest quality is provided for all customers.
Aravind’s team sees the patient as customer with choice, even those patients who cannot afford
to pay. Zero is one price point they can choose from, and the market rate is another, with subsi-
dized rates offered in between these two price points. Letting the patient choose the price helped
build demand across customer segments. Approximately half of the nonpaying outpatients come
to Aravind on their own account, and half come in after Aravind’s outreach efforts.
However, uptake in the rural communities where the eye camps were held was still under 7%
of the population who needed eye care.* It became clear to the management team that providing
access to service to the rural communities through outreach alone was not enough to create the
impact they sought. Exploring potential reasons for the lack of uptake, their initial conclusion
was that it was simply not a priority among the rural population, who had poor acceptance of eye
treatment and fear of surgery. Referring back to the AAAQ framework of health and human rights
(see Chapter 3), they came to the conclusion that while they had succeeded in addressing afford-
ability, they had not succeeded in addressing awareness and acceptance, nor in fully bridging the
gap to access.
* Aravind Eye Care System: Providing Total Eye Care to the Rural Population. Ivey Publishing, Teaching Case
W11212-PDF-ENG.
Initial responses focused on marketing and communications. How could they explore differ-
ent promotion options in rural markets? What were different ways in which they could change the
perception of the target population? The key assumption was that Aravind’s need to increase rural
customers’ acceptance required education, the creation of trust, and reduction of the associated
costs (not just the cost of service). This is what Aravind’s executive director Thulasiraj (“Thulsi”)
Ravilla referred to as their pull strategy: drawing customers in.
Over time, Thulsi realized that in this case, the demand side required both a pull and push
strategy. The solution was not to assume that customers did not know what they wanted or what
was best for them and to concentrate efforts on convincing them. It was the organization that
needed to change its way of thinking and behaving. Achieving their vision of universal coverage
required adjusting their mix of services and also where and how they interacted with patients. If
not everyone was coming to the eye camps, then perhaps the eye camps were not the best way to
fulfill the organization’s goal of reaching everyone.
It was the organization that needed to change its way of thinking and behaving.
Aravind’s team was able to crack the case only by setting up a network of permanent primary
eye centers (vision centers). Using population coverage as their key metric, they calculated that
each vision center would cover patients within a five-mile radius, based on the data on attendance
at the eye camps. At the time of writing, there were about 50 vision centers in Tamil Nadu, cover-
ing a total population of 3 and a half million people. These centers cumulatively had registered
over 900,000 patients, well over 20% of the total population. This translates to universal coverage
of that population, according to Thulsi and the Aravind team. Plans are in place to add a 100 more
centers, scaling to a population of 10 million.
Looking back, Thulsi identifies a number of factors that were key in building the organization
and scaling its impact. He is careful to point out that “hindsight is 20/20” and that these factors
were identified only by doing the work and listening to the community—there was no blueprint
from the start with perfectly laid out plans. Many of these keys to success echo similar patterns we
have seen in other cases in this book.
First, basic services can be provided by a basic workforce with a basic level of training. In the
case of Aravind, not every patient needed to see an ophthalmologist, as the majority of clinical
needs of patients presenting at the vision centers could be diagnosed and treated by optometrists
who have two years of training after high school. Technical support was provided by the central
team, and centers were telemedicine enabled. This allowed Aravind to keep costs low, charging
20 rupees per consult, which is less than the bus fare to the nearest eye hospital. Each center
was able to break even as a stand-alone financial unit. This is similar to the case of HLC from
Chapter 4. Decentralization of the services, freshly trained young graduates rather than highly
specialized teachers, low costs, and technical support from the headquarters allowed for each
center to break even and to produce the desired educational (in the case of HLC) or health (in the
case of Aravind) outcomes.
Second, scaling the services require that the processes be tightly packaged for easy replication.
Quality management, standardization, and a detail-oriented approach were necessary. Personnel
were disciplined, accountable, and responsive to patients. To deal with large volumes, it’s necessary
to find the right balance between the “factory” approach of standardized processes and the need
to tailor the human interaction to the local context and the person. While the Aravind Eye Care
System can be thought of as “mass production” and the goal of its founder was to serve millions, its
services are still tailored to multiple populations. These include children with congenital problems
or infections, workers with refractive errors, diabetics with retinopathy, and adults with cataracts,
glaucoma, and other clinical needs. Process innovations also helped drive the costs down across
the different services, such as the assembly line approach to clinical care.
It’s necessary to find the right balance between the “factory” approach of standardized pro-
cesses and the need to tailor the human interaction to the local context and the person.
Third, tailoring your services to your customers’ needs is the cornerstone of your social ven-
ture. Thulsi’s message draws parallels with the case of Daily Table in the United States, the need
to understand your customer and to offer them the ability to exercise choice. Aravind’s perspective
is that customers are driven by value for money and quality of care and that charity is not always
associated with quality. They don’t advertise to paying customers that they are subsidizing those
who are not able to pay. Customers come to you because they want to get a high-quality, high-
value service for themselves, not because they want to help others.
Aravind has quadrupled its growth every decade, making an operational surplus of 50% on
revenues of tens of millions of dollars, a performance “worthy of any commercial venture.”* Says
Thulsi: “Self-sustainability emerges from a complex interaction of organizational, technical, and
human factors.” Careful consideration must be given to pricing structures, patient volumes, stan-
dardization and effective resource use, and an extremely cost-conscious leadership is needed.†
* http://www.forbes.com/global/2010/0315/companies-india-madurai-blindness-nam-familys-vision.html.
† Mehta, P., and Shenoy, S. (2011). Infinite Vision: How Aravind Became the World’s Greatest Business Case for

Chapter 7
Measuring Impact
Targeting Success
This can be one of the most exciting times in developing your social venture. You’ve learned every-
thing there is to know about the challenge and context you are tackling and your target audience.
You’ve designed an exciting and innovative new solution that emerged from your end users and
built a theory of change around it to penetrate that market and that audience and change the face
of the challenge at hand. The first step of implementing your solution and manifesting that change
is setting your performance metrics. Before you start, you need to ask yourself, “How will I know
when I succeed?” To set your strategy, you need to define what success looks like and how you will
measure your impact. Then you’ll work backward from there!
Your social impact is the basis of all you do; it is the purpose of your work. It defines how
you spend your time, allocate human and financial resources, build external partnerships—every
component of your work and your organization. How will you know when you’ve reached your
goal? How will you monitor your progress as you work toward that goal? How will you decide
where to spend your time, money, human, and other resources? And how will you convince others
to support you and invest in you? This is why it’s critical to be able to measure and communicate
your social impact.
To set your strategy, you need to define what success looks like and how you will measure
your impact. Then you’ll work backward from there!
The reason impact metrics is so fun in social entrepreneurship is it’s so challenging! There’s
lots of room to get creative in imagining what changes you’ll see and how you’ll measure them.
Most of the time, in a typical commercial venture, profit is the main indicator of success. This is
used to evaluate the growth of the start-up, its customer base, its sales, and its penetration into the
market. In a social venture, your goal is social change, and you need to find a metric to capture and
track that! Determining whether social outcomes have improved and people have been empowered
requires a lot more creativity. And, on top of that, you’re still tracking your financial viability to
make sure that this venture is financially sustainable! So, you’ll need more than one indicator to
131
measure the health, growth, and success of your social venture. Let’s dive in and see how others
have done it and how you want to do it for your own social venture.
Theories to Results
We’ll start by building on the wealth of work that you’ve already done. You may not know it, but
you’ve already built the foundation to measure your success. In Chapter 4, we talked about your
theory of change and how you define the change you want to see. You’ve already set your desired
ultimate outcomes and the intermediary effects of your work, which will lead to those outcomes
if your assumptions hold. Next, we’ll take the theory of change one step further, building on it to
create the logical framework of your organization. The logical framework will lay the foundation
for your building your organization, operationalizing your theory of change, specifying how you
will execute on your vision, and forming the blueprint of your work. It sets the stage for budgeting
and business planning, which we’ll focus more on in the coming chapters. Most importantly, it
sets the stage for forming your social impact metrics.
In this chapter, we’ll focus on the characteristics of robust social impact metrics, providing
examples from existing social ventures. You’ll find as you read more about this topic online and
in other publications that the term social impact metrics is often used interchangeably with other
common terms, including success indicators, success metrics, impact metrics, or performance indica-
tors. The idea behind these terminologies is that the act of achieving success in your social venture
comes hand in hand with the acts of measuring and demonstrating success.
An easy way to internalize the meanings of these different terms is to go back to the core of
the words: a metric is simply a measure. It is used to indicate success. Indicators and metrics are
different words with the same function: capturing results.
Different Metrics for Different Fields

Different organizations in different fields of work have measured success in different ways.
Educators measure educational outcomes, like the learning objectives in a course you’ve taken,
and the assignments you’ve performed that are graded to reflect whether you’re reaching those
objectives. Healthcare providers measure health outcomes, like your heart’s functioning and the
test results that indicate whether it’s functioning well. Financial investors measure investment
outcomes, namely, the financial return on their investment. One measure they use that has been
applied in the social entrepreneurship world is return on investment (ROI).
What Is ROI?
This is a way of assessing what you are getting out, compared with what you are putting in. An
example with financial metrics is that if an investor puts in $1 million into a venture and gets out
$1.4 million, then this is a 40% return. ROI is used in many fields to compare various options
of where you should put your money. For example, in the field of public health, ROI is used to
highlight smart investments that produce positive population outcomes and quantify the impact
per dollar invested. A bicycle helmet can result in a return of almost $50 for every $1 invested*!
* By preventing medical costs. See http://www.nphw.org/assets/general/uploads/APHA-NPHW2013_Sec_ONE_4b

_noTOC.PDF.
Measuring Impact ◾ 133
Knowing exactly what you are putting into your social venture and what you are getting out of it
is crucial to expanding your impact.
ROI is only one way to communicate your impact, and you can use measures other than
monetary value on the outcomes side. For example, the social ROI can be the number of students
who stay in school per x dollars invested, the number of cases of a certain disease prevented, or the
number of jobs created. Even without converting these into their estimated monetary value, this
measure still allows you to compare different routes or different ventures. The cost of keeping a
child in school, the cost of preventing one case of disease, or the cost of creating one job is another
way to evaluate different options when forming your plans or approaching different investment
opportunities.
Quantifying Your Social Investment

Further in the chapter, we will discuss what to do in settings where it is hard to collect data, how
to make sure your impact metrics are easy to communicate and useful for your stakeholders, and
describe a few examples of commonly used metrics. You can refer to these examples or invent
your own metrics! These examples are just to give you an idea and help get your thought process
flowing.
To start thinking about various metrics that others have used, a useful introduction can be
the IRIS catalogue developed by the Global Impact Investing Network, a nonprofit organization
dedicated to supporting social impact investing. Flipping through this catalogue will help give
you a few starting ideas of the types of metrics you might be able to use for your social venture.
Ultimately, the number 1 pointer to keep in mind when selecting your metrics is to keep it simple.
As a social entrepreneur, your main purpose in collecting data on your social impact is to know
whether you are achieving your goal. Therefore, if your goal is well defined and tied into a set of
smart objectives (more on this further in the chapter) then your impact metrics will naturally
follow.
Which Metrics Are the Right Fit for You?

There are no one-size-fits-all success indicators. On the one hand, it is practical to use simple,
clear-cut indicators that are common in your field of practice. This will enable others, such as
investors, to assess you and compare you with other social ventures. On the other hand, each situ-
ation is unique, and it’s up to you and your stakeholders to decide what measures of success best
reflect your goals and the social outcome(s) you’re trying to change.
If, at any point in the process, you start to feel that measuring your social impact is getting
complicated and overwhelming, then you are most likely doing it wrong. Don’t panic—this is an
experience most social entrepreneurs go through—it’s all part of the process of finding your met-
rics. Take a step back, revisit your goals, focus on what you want to achieve and what the obvious
indicators would be that would let you and your stakeholders know if, when, and to what degree
you have achieved your goals.
Focus on what you want to achieve and what the obvious indicators are that will let you and
your stakeholders know if, when, and to what degree you have achieved your goals.
Before You Start

A few tips to keep in mind while thinking about how you’ll measure success.
Decide Early On
You want to measure the change you are creating from the moment you start. One of the very first
decisions you need to make before launching is to decide what you are going to measure—what
pieces of data will indicate success. The reason it is not recommended to leave this to a later stage
is that defining the indicators you are working to achieve will help you define your work plan
and business plan. You can always revise your success indicators at a later stage in your journey if
evidence points to a need for adjustment. This may happen if you find that the indicators you have
set are not truly reflective of the change you are achieving or if the data collection is not feasible
or takes up too much time and resources and needs adjustment. But doing the work and then
deciding what to measure is generally not a good idea. This is why we start early on by defining
the metrics. They are the core drivers of our work, not an afterthought. Building your business
model and work plan and then deciding on your metrics may run the risk that your organization
or initiative goes in a different direction from what your mission, vision, and theory of change
have set out to accomplish.
Measure Inherently
Ideally, you’d like for the measurement of your success indicators to be a part and parcel of your
work, rather than an extra step. Think about what steps your team, suppliers, providers, end
users, and other stakeholders are already taking. Discuss with them what they feel and observe
are the important pieces of information that can be gleaned from their roles and processes. What
information can you collect through your core operations? Streamlining the processes, human
resources, time spent, and associated financial costs are all keys to your success, across the board!
This applies to all components of your work, first and foremost measuring your success.
Don’t Measure Too Much

An easy pitfall to fall into is setting too many indicators. This will result in a cumbersome and
inefficient data collection process that will be labor-intensive and require more time and resources
than necessary. A general rule of thumb is that the smaller the number of indicators you deem
sufficient to demonstrate success, the better. What statistics do you want to show to your funders,
customers, team, and other stakeholders in 1 year, 5 years, 10 years, and 20 years? What statistics
do you want to reach as your core mission and the ultimate reason for your work? Oftentimes, the
ultimate outcome is just one statistic. A simple example is the reduction in infant mortality in a
community from the baseline rate to a target.
Refer to Baseline Data

Because change by nature is relative (we are changing from the current situation to a future sit-
uation), ideally, we would want to compare our future statistics to current statistics. This can
sometimes be tricky in settings with a dearth of baseline data. In Chapter 2, we talked about the
importance of characterizing the problem you are trying to solve or the situation you are trying
to build on. The work you have done at that earliest stage may be the most valuable resource to
inform your comparative statistics. In an ideal situation, you will have statistics available to you
on the current status in your target population (such as infant mortality rate). In a less than ideal
situation, you may have to refer to average statistics, citing reasons that point to your target popu-
lation being above or below average.
One powerful step you can take is to collect your own statistics when starting out on your
social venture. This is often the most valuable use of your time and resources, not only to have a
reference point to compare to in the future but also to better understand the setting you are work-
ing in and tailor your intervention to be as effective as possible. It might represent an extra step,
but this will be a one-time investment, so it’s worth considering.
What to Look for in Your Impact Metrics

Earlier, we talked about the multidimensional causes and consequences of the many social chal-
lenges we face. Education, for example, has been linked to improved earning power, health out-
comes, peace-building, and other social outcomes. Let’s take for example an organization aiming
to improve the level of education in a community, having identified low levels of schooling in
that community. The approach of the organization and the way it measures its impact will relate
directly to how the problem was characterized in the first place. If the initial research in that
community suggested that enrolling children in school at an early age was not the problem,
but keeping them in school was, then the organization’s work would focus on identifying and
tackling the causes of school children missing school, failing, or dropping out. A simple impact
metric to evaluate success could then be the percentage of students advancing from one grade to
the next each year. The number of children enrolling in school in this case would not be the best
metric.
Another example we’ve visited was the text message intervention, which improves health out-
comes by reminding mothers to bring in their infants for vaccination. A simple metric in this case
could be the number of vaccinations given after the intervention, compared with before, assuming
no other major changes have taken place that might be responsible for this change.
The Comparative Factor

Both these examples point to the fact that impact relies on comparison. It is rare that an absolute
value can inform the user as to its impact. If a number of children are brought in for vaccination
the first year in which the text reminder intervention is applied, some questions we might ask
ourselves are as follows: How many children were brought in last year? Or, how many children
are there in this community? If there was no increase from year to year, then there is no evidence
that the intervention worked. If there are a large number of children in the community and only
a small fraction have been brought in for vaccination, then the social entrepreneur would want to
think about how to expand the reach of this intervention.
Baseline Data
This brings us to the importance of collecting baseline data. You can measure your impact only if
you have adequately characterized the situation before you implement your venture. Oftentimes,
you can do this as part and parcel of implementing your venture. For example, you can interview
mothers bringing in their infants for vaccination, asking them either whether they brought them
in last year or whether they missed their last appointment. Other times, it might be necessary to
take the extra step of collecting baseline data before implementation. This could entail imple-
menting measurement systems before implementing the intervention—for creating or strength-
ening the existing medical records system to track the number of missed appointments. Another
approach is to select a comparison site where the intervention is not being implemented.
Controlling for Other Factors

Collecting data on other factors influencing your target outcome is also important. While char-
acterizing your social challenge you may have identified factors along the causal pathway to your
outcome. For example, going back to the text message intervention, forgetting to bring children
in for appointments was recognized as one of the causes behind lack of vaccination, which this
example social venture decided to focus on. But other factors were most likely also identified. One
example could be the challenge of transportation. If transportation were improved at the same
time as the social venture rolled out its intervention, this information needs to be accounted for
when evaluating social impact. It could be that the text message reminders in this case were not
the leading factor causing improved vaccination rates but rather that transportation was. This
provides critical information! In such a case, rather than (or in addition to) focusing on expanding
the text message reminder system, the social entrepreneur would then focus on transportation and
other factors that can have a bigger impact on the social outcome.
You can measure your impact only if you have adequately characterized the situation before
you implement your venture.
Linking to Quality
In certain cases, your intervention might entail the implementation of a certain product or pro-
cedure that is reported to improve outcomes. Let’s take the case of the medical device designed
to reduce neonatal deaths. To track your growth, you might decide to track the number of clinics
in your target area that have implemented this device. Here, it’s important to link the previous
indicator to quality control indicators, to ensure that there is no room for error. If the device is
used incorrectly, the number of clinics that have implemented this device will not be an accurate
reflection of the health outcomes you are assuming. The number of clinics does not reflect the
ultimate social outcome we’re working toward (reduced neonatal deaths) but reflects instead a step
we are taking that is necessary to get there. To link this to the social outcome we’re looking for,
it’s important to focus on quality indicators too. Any gaps or shortfalls in linking the number of
clinics to the number of deaths prevented could be addressed by working on quality of care.
Another common mistake is to measure the “number of people trained.” Training people does
not ensure that they will correctly execute and apply the skills they have gained, nor that they
have even gained the skills you set out to train them for in the first place. Gaps between number
of trainings conducted and actual learning outcomes may reflect a need to improve the quality
of training or the content, or change the way participants are interacting with and applying the
information and skills provided.
Inputs versus Outputs versus Outcomes

This brings us to the importance of measuring outputs rather than inputs. Training people is an
input. Buying a machine is an input. Distributing a bed net is an input. The machine could col-
lect dust in the corner of a poorly maintained hospital. The bed net could be used as a fashion
or furnishing accessory rather than as a life-saving device. Inputs are the processes and steps you
implement to reach a certain outcome, and outputs are the tangible results that link those inputs
to your desired outcome.
If your desired outcome is a reduction in the number of malaria cases, a measurable output
could be that you have increased the number of people sleeping under the full protection of a bed
net. The inputs required to reach this number would be the bed nets themselves, the instruction of
the end user on how to effectively use this input, and the desire of the end user to do so!
Agriculture is an easy-to-illustrate case in point. The number of agricultural tools distributed
to farmers living in poverty is not an indicator of social impact; it is an input. Increased agri-
cultural yield is an output. Better yet, increased household income (through increased sales of
agricultural yield) is the ideal metric in such a case, to avoid the loophole that yield has increased
but access to markets is not available. It is this metric that will result in the social outcome we are
working for in this example, of eliminating poverty.
Short- versus Long-Term Goals

In the previous health-related examples, the ultimate success metric is the reduction in the preva-
lence of malaria cases in your target community or the reduction in infant mortality rates. These
are long-term goals that need time to be reflected in the population data collected in your com-
munity. While you are working toward these goals, you can select intermediate indicators that
help you measure your work so that you will have an idea of whether you are moving in the right
direction. The increase in number of mothers bringing in their infants for vaccination (or decrease
in number of missed appointments) and the increase in number of households with inhabitants
sleeping under the full protection of bed nets are examples of success indicators that can be used
to point toward the successful eradication of root causes linked to the outcome you are tackling.
Measuring Intermediate Outcomes

Such intermediate indicators point to the more immediate outcomes of our work that are hypoth-
esized to move the ultimate outcomes in the right direction. Sometimes, it is not possible to
measure the ultimate outcome right away. This is common when dealing with outcomes that take
years, if not decades, to improve. You need to proceed very carefully in selecting your intermediate
outcomes, to make sure that they are truly indicative of progress made toward your ultimate goal.
This is where the assumptions underlying your theory of change come in handy. Don’t be afraid
to continue questioning the assumptions as you proceed!
This Is Where You “Cash In” the Benefits

of Your Evidence-Based Solution!
In many cases, the link between correct usage of your product/service and improved outcomes has
already been demonstrated, and these types of intermediate indicators are sufficient to measure
social impact. For example, the solar-powered cook stoves distributed and sold by One Earth
Designs have been demonstrated to reduce exposure to indoor air pollution by replacing tradi-
tional cook stoves. Therefore, tracking the number of clients using them and conducting quality
control checks are accurate methods of quantifying social impact. It may be beyond the scope of
the organization to measure population health outcomes over time, such as reductions in the num-
ber of cases of pulmonary and cardiac disease, but because of the robust scientific link between
these diseases and exposure to indoor air pollution (as published by numerous scientific research
studies), it is sufficient to measure the reduced exposure to indoor air pollution, given the wealth of
evidence on improved health outcomes associated with reduced exposure. Another social impact
of solar-powered cook stoves is a reduction in greenhouse gas emissions by eliminating the burning
of wood to power traditional cook stoves. This has also been quantified, and thus, it is possible to
directly link the number of clients consistently using the cook stoves to the reductions in green-
house gases.
The most classic example of this scenario is if your social venture is increasing access to a basic
social good: clean water, education, healthcare, shelter, or even financial services or other programs
targeted for poverty reduction. In some cases, access itself is a basic human right and the ultimate
social impact. In other cases, access is linked by existing evidence to improved social outcomes
and is sufficient to illustrate social impact. An important note here is to keep in mind the quality
assurance aspect described previously. Providing access to clean water is only a social impact if you
can demonstrate that the water is clean by a set of prespecified standards.
Direct versus Indirect Benefits

Sticking to the example of the solar-powered cook stoves, the direct benefits are improved health
outcomes and reduced greenhouse gas emissions because these are the goals that drove the
social entrepreneurs to found the social venture and develop these cook stoves in the first place.
However, there are numerous indirect benefits that resulted from the growth of this organiza-
tion. The creation of jobs is an important one. By introducing this new product to the market,
the social enterprise is creating work opportunities for retail distributors and manufacturers, thus
increasing their household income. (It is important to point out here that, in this example, the
creation of jobs is an indirect benefit, while in another example, it could be a direct benefit
and the primary goal of the social enterprise.) Increased household income often also results in
increased access to other social goods such as education and healthcare for the families. If you
really want to track the ripple effects, one can also point out in turn that this increased education
for the children in these families will also lead to increased earning power for them in the future,
thus benefiting their future families! Thus, each social venture has both direct and indirect ben-
efits. While the direct benefits are your main indicators of success—whether you are achieving
your mission—it is often valuable to also capture the many indirect benefits you are producing
along the way.
Further Considerations
Valuating the Supply Chain
Because every social venture involves a supply chain (the people and processes involved in the
different steps of putting together the social product or service), it is valuable to think about the
social benefits incurred at each step in the supply chain. If your product is an object that is made
of many parts, where are you getting the parts to put together in producing it? If it involves
distribution, who is getting the product (and the parts that go into it) from point A to point B?
If it involves sales, which individuals and/or retail establishments are benefiting? Many social
ventures are built around building supply chains that create new jobs, empower marginalized
populations, and foster change through the process, not just the outcome. For example, a social
venture providing eye care is focused on the outcome. But a social venture providing average
consumer goods by employing people with impaired vision is focused on the process. In this
case, the number of people with impaired vision who are now sustainably employed is their suc-
cess metric. Even if your social venture is focused on the product or service itself, you still need
to think about the process. Both product and process should be measured: you want to make
sure that you are achieving your intended outcome without incurring unintended consequences
along the way.
Management Indicators
We’ve focused up until now on measuring the outcomes you’re working toward, since those are
your bottom line, and figuring out what success metrics you’ll use to capture them. But don’t for-
get, you are running a venture here, and you will also need to track your internal operations and
performance to get there! Every company and venture needs to make sure it’s doing its work right.
So, while this chapter focuses mostly on outcome, here is just a shout-out for you to start thinking
about your internal management systems too.
Chances are, you’re not going to hit the bull’s eye at the first try and reach the outcomes you’re
targeting. You’ve already seen how much prototyping, testing, and piloting are involved in build-
ing a successful social venture! In addition to measuring your impact, you’re also going to have to
keep track of your own internal “control knobs”—these are your internal operational indicators
that will reflect what parts of the process you should adjust to get better results.
For example, you can refer to the uptake of your product or service by the target community,
i.e., the number of people in your target audience who are using it. Do you need to focus on sales
and marketing to have a bigger impact? Or let’s say uptake is high but you’re still not seeing results.
Do you have the right monitoring systems in place to track whether it’s being used; by whom and
when and where; and whether it’s being applied correctly? The latter can be demonstrated through
observation or a simple checklist. This isn’t adding extra steps to your work, it is your work. These
are the kinds of performance or operational indicators that tell you whether you’re implementing
your venture in a way that is getting results.
Build Systems for Data Collection and Analysis

The metrics you are collecting are valuable not only to inform your own work and your own
stakeholders but also to inform the work of others and to empower your end users by generating
knowledge, information, and awareness. This creation of knowledge is an output in and of itself,
which you are producing and which has a positive social impact. Let your social venture be a fac-
tory for producing information, beyond producing the specific target you are aiming for!
By building processes for data collection and analysis, building capacity in your team and your
community to execute the processes, and disseminating this information widely, you are adding
value above and beyond your product. One way to achieve this is to automate the data collection
and analysis process, like HLC did. Investing in technologies—whether hardware, like the tablets
they used in the field, or software, such as data management and analysis packages—may yield a
high return in terms of your ability to produce and communicate your social impact metrics. This
may also require human resources investments such as training. As you hone in on what metrics
you’re going to use to indicate success, step back and ask yourself how you can build a system
around this so that it will be an integrated part of your venture.
One of the final pieces of the social impact metrics assembly line is communicating your
results. We will focus more on this in Chapter 12. Most importantly, a feedback loop is needed to
tie your assembly line together. Communicating your results to the outside world is one goal, but
communicating and reflecting on your results internally are crucial to evaluating your work and
strengthening your systems. In the social service sectors, these systems are referred to collectively
as monitoring and evaluation (M&E).
Interview Box. Jake Harriman, Founder and CEO,

Nuru International
TC: How do you measure your impact?

JH: First off, I want to say that we don’t measure for the sake of
measuring; we measure to get to scale. It’s very much inte-
grated into our daily work; we built measurements into our
operational model and exit plan. I personally didn’t know the
first thing about monitoring and evaluation—this is why I
hired a team leader specialized in metrics.
TC: What are some of the main challenges faced by your team in
measuring impact?
JH: I think that creating and communicating a clear value-add for measuring impact is
important. Otherwise, it’s difficult to get buy-in for this piece because it’s not as valued
and is often seen as more of a box to check. If people aren’t convinced that this is an
important part of the company, you risk getting token efforts and token results.
TC: Do you think that we can do better in terms of innovating new ways of measuring impact?
JH: I think we have to be careful because the industry lacks standards, which makes it
difficult to compare impact across different companies. We use a standardized tool
because it’s already been validated and because it makes it easier to compare.
TC: We’ve met social entrepreneurs with backgrounds ranging from law, tech, journalism,
retail, to the military! What are the key qualifications that you think a social entre-
preneur needs?
JH: Social entrepreneurs are a special breed; they’re not defined by their background but
by the way they look at things. They see a problem in the world, where people have
been failed by a market gap, a failure of the government or the market, and people are
suffering because of the gap. They decide to build a company around that gap with a
product or service for that population. Social entrepreneurs must be laser focused on
social impact too, which differentiates them from commercial entrepreneurs—Their
focus is on people who are suffering.
Interview Box. Bennadette Mugita, Impact Programs Manager,

Nuru Kenya
TC: Bennadette, you’ve been working your entire life to improve

social outcomes in Kenya and other countries in Africa. Tell us
how you came to be where you are today.
BM: I started out as a health-oriented person, studying nursing
here in Kenya, and then community health and psychology
in South Africa. At first, I worked with international NGOs
such as Medecins Sans Frontiers (Doctors Without Borders)
in South Sudan and Congo, responding to emergencies. But I
wanted to do something in my community, where I was born and brought up. When
I heard about the Nuru model, I felt it could make a big difference.
TC: What was it like living and working in these four African countries; are there similar
challenges or is it very context specific?
BM: It is very different, especially in South Sudan, with the new nation and no medical
supplies. Where there is war, it’s so hard to improve outcomes.
TC: Nuru’s model is that improving social outcomes prevents conflict. Is this something
that people in your community thought of even before Nuru came into the picture,
or was it a new idea?
BM: Yes and no—people know this is true but they don’t have the will, desire, and drive
to initiate this strategy of conflict prevention. Some leaders (especially political) use
conflicts in their areas to advance their career. If the Nuru team did not come to this
region, it would have taken centuries or never even happened. Most NGOs in these
countries are health oriented and focus on one area such as HIV/AIDS, without tak-
ing a holistic approach in giving solutions to conflicts. After satisfying one area of
need, the others lag behind and conflicts remain like never attended.
TC: Putting aside the numbers and metrics for a moment, as someone who has lived in this
community all your life, are you able to observe the impact?
BM: You see and feel the changes. For me, it was especially obvious in the health area, but
of course, I had to master other areas like agriculture, financial inclusion, etc. to keep
pace with them in their areas of impact creation. For example, Nuru’s health program
with the field officers’ house visits teaches Nuru farmer households 10 healthy behav-
iors to improve maternal child health. More people are delivering in healthcare facili-
ties, breastfeeding for six months, immunizing their children, sleeping under mosquito
nets, handwashing at critical times, having safe water treatment and latrines. The field
officers sell affordable commodities like handwashing stations, sanitary towels, soap,
and the uptake has increased. Most farmers have shown improvement in health, and
you are able to spot these changes. You go to households, you see maize planted well,
crops are healthy-looking, which is a sign promising bumper harvest for Nuru farmers
compared to non-Nuru farmers. Again, you meet people who are operating businesses
started using savings from Nuru Financial Inclusions groups.
TC: Do you think that this model can be applied in other communities and countries?
BM: Yes, we started first in Nuria West district and now we have expanded to Nuria East
district. When we did this, we surveyed the community first, measured indicators,
needs, educational level, agriculture, and scouted different counties. Next, we will scale
to other districts. I think it could work in other countries, even South Sudan. You need
to engage all community members to ensure maximum participation so they own the
program. They identify priorities and spearhead what they want done. For example, it
would be better to identify the crops the local people plant so that you support them
with that but only improving the method and techniques for doing the farming.
TC: What about people who say that it’s too geopolitically rooted and complex to solve?
BM: I don’t think it’s very complicated. We make it very clear. We invite stakeholders, talk
about what we are able to offer, make expectations clear and spell out each party’s
roles and responsibility so that it becomes a shared common goal. We stay politically
neutral, choose members well, and now, we have incorporated a cooperative strategy
in Kuria East to make work even easier. It becomes complex when some leaders espe-
cially administration are left out or when a certain clan feels left out in planning and
executing our goal in a certain area. We are all seeing the changes and feeling the
impacts as a team and as a party in this model.
Building Your Logical Framework

Alright, so we’ve talked about what to look for when thinking about your social impact metrics
and the characteristics you should be aiming for. Now, let’s go ahead and set the actual targets!
We’re going to use a planning tool called the logical framework, or logframe for short. It helps you
organize your inputs, outputs, intermediate outcomes, and long-term social outcomes into one
unifying framework. This will help you determine what your denominator will be. You’re starting
from zero and hopefully working to reach 100% of your target!
Most of us have a love–hate relationship with planning tools, feeling that they dampen the entre-
preneurial spirit. Ultimately, if you have a bunch of brilliant ideas and truly intend on implementing
them, at one point, you’re going to have to sit down and organize all your thoughts. This is the time.
Let’s take the vision of success that you’ve built and figure out how we’re going to turn that into reality.
Step 1: Setting SMART Objectives

We’ll start by breaking down your ultimate goal into a number of objectives, so that we can then
tie each objective into one or more success metrics. Having specific and measurable objectives
makes it possible to link your goal to the outputs you are going to produce. Remember, you want
to keep the number of metrics manageable—this will tie back to keeping your objectives simple
and finite. A helpful way to think about how to set your objectives is to make them “SMART”:
specific, measurable, achievable, realistic, and timely. Figure 7.1 illustrates an example of smart
objectives linking an overall goal to a set of measurable outputs needed to get there.
SMART objectives include indicators. If eradicating poverty is the overarching goal, then be
specific about how you’re going to measure this. Your indicator of poverty could be household
income: you might aim to increase household income by a specific amount. This provides a metric
you can refer to that will help you assess what needs to be done and be able to say when you’ve done
it! Household income can be measured, and health statistics can be tracked by applying a household
health survey. This is just one example—you might use other indicators for other goals—and the
case study at the end of this chapter provides an example of multiple indicators for the same goal.
Goal: Objectives: Outputs:
Poverty reduction • Increase average • Increased crop yield

in a marginalized monthly household from new agricultural
community income by 30% for loans program
50 families over the • Increased sales from
course of one year local market presence
• Improve health and • Increased savings
education outcomes from money
for participants from management
below national program
average to above • Reduced disease
national average from home visits
Figure 7.1 Example of SMART objectives.
Step 2: Producing Measurable Outputs

Outputs are what you need to produce through your work before you can reach your objective.
To more easily understand the difference between goals, objectives, and outputs, it may be
helpful to think of a class you’ve taken. In a social entrepreneurship course, for example, the goal is
for students to gain knowledge and skills needed to build a social venture. The learning objectives
will be along the lines of… “By the end of the semester, students will be able to:
1. Generate an economically, socially, and scientifically feasible solution to a social challenge of

their choice.
2. Characterize and evaluate the audience for the proposed product or service, incorporating
socioeconomic and environmental considerations, including vulnerable populations, vari-
ability in population exposures, and gender analysis.
3. Develop a business plan detailing resources and timeframe required to implement the pro-
posed solution and including a SWOT analysis of strengths, weaknesses, opportunities, and
threats related to the proposed solution.”
The measurable outputs produced to meet those objectives will be assignments, such as the
following:
◾◾ Seven weekly in-class discussions

◾◾ Seven weekly homework assignments
◾◾ One final project: 10-page executive summary
◾◾ Social venture pitch contest
◾◾ Group participation as scored by peers
The importance of these assignments is that they can be graded by the instructor, thus provid-
ing a metric that indicates whether the student has successfully achieved the learning objectives.
Overarching goal: What is the social outcome you are working to achieve?
Outputs Activities Success
Objectives needed to needed to Cost Time indicators
(S.M.A.R.T.) reach those produce those estimates for estimates for (targets and
objectives outputs these activities these activities milestones)
Figure 7.2 Example logframe template.
Figure 7.2 provides a template for you to fill in up to three objectives and list all the outputs
you’ll need to produce in order to reach those objectives. You can play around with it and tailor
it to your needs; you might have fewer than three objectives—or conversely, a more complex
framework—but give it your best shot and chances are you’ll discover a lot about how to clarify
what you’re trying to do and how you’re going to do it.
Step 3: Determining the Inputs

Outlining the Activities Needed to Produce These Outputs
What activities do you need to conduct in order to produce the outputs you need? In the case of
the previous course assignments example, you’d need to read the required materials before class,
research information on your topic of interest to develop your weekly deliverables, meet with your
classmates to work on your group projects, write the documents/slides/etc. that will result in the mea-
surable output, then review, edit, and submit to the instructor. In the case of the poverty reduction
example in Figure 7.1 or any other social venture, it gets much more complicated. Careful planning is
required to budget enough time and resources to ensure that you successfully complete the activities.
Estimating the Time and Cost of Conducting These Activities

The next step is to estimate the time and cost of these activities, which will help create a budget for
your social venture. Don’t forget to budget time and money for data collection, analysis, evalua-
tion, and reporting of your social impact metrics! In the household health survey example, how will
you ensure that the survey you’re administering really does capture the health statistics that you’re
looking for? Both the content of the survey and the way it is administered matter, or a survey might
not be the most effective tool—maybe spot-checking a random sample to conduct more in-depth
interviews, measurements, or diagnostics is the way to go. This may include investing in experts
up front, and it may include hiring a M&E officer. Or it may include investing in technology to
streamline the M&E process—like the tablets HLC procured for each center and like the software
that most of you will purchase or the coders you might hire. All these steps should be factored into
your activities, timeline, and costs, whether you use a logframe or any other planning tool. In the
next chapter, we’ll talk more about assigning financial and time estimates to your activities.
Pros and Cons of the Logical Framework

All planning tools have advantages and disadvantages, and the logframe is no exception. The
advantages of using a logframe are that it puts everything in one place to help assess how the
different components of your theory of change will fit together as you grow it into an organized
initiative. It helps you connect all the dots in terms of specifying your objectives, outputs needed
to get there, activities required to produce those outputs, costs of conducting those activities, and
success indicators. It uses your theory of change as a starting point, building on it and setting the
stage to link the core components of your intervention to a budget, work plan, and key metrics to
assess your progress. For those who need a planning tool to help develop these long-term forecasts,
the logframe comes in handy.
The disadvantage of the logframe is that it can often be perceived to impose rigidity on an
organization. Many social entrepreneurs feel that they need to retain the flexibility to respond to
market needs and opportunities, learn by trial and error, and figure things out as they go along.
Rather than decide from the outset what the work plan is, it is tempting to proceed one step at a
time, depending on what information and inspiration unfolds each step of the way.
A happy medium might be to develop a logical framework (or some other equivalent or similar
planning tool) and stay open to modifying it, periodically checking in to see whether the targets
still make sense in each new phase, depending on what new information, inspiration, feedback,
or resources become available. If you find that the logframe is not the right tool for you, there are
other tools you can refer to in developing your social impact metrics. As one example, McKinsey &
Co.’s Learning Driven Assessment Workbook provides an online platform using the work of the
Rockefeller Foundation, European Venture Philanthropy Association, and others, in which you
can enter your objectives, organize your learning questions, and come up with your own metrics.*
How to Choose Your Targets

Whether you use a logframe or other planning tool or no planning tool at all, you will still have to
set your success indicators; these are the targets you’ll be working toward. Having “smart” objec-
tives helps ensure that you can measure your success—but how do you come up with the numbers
to attach to these?
There is no formula for choosing your targets, but there are a number of factors that will inform
your decision-making process. First, baseline information is necessary. As we have discussed, your
targets are most likely comparative; i.e. you are aiming to reduce or increase the incidence of some
social indicator by a certain amount. If no information on the baseline is available, one of the first
* This is just one example: http://lda.mckinseyonsociety.com/.

steps you can take in your intervention is to invest time and resources gathering this information.
Second, using a participatory process for setting your targets will help ensure that they are realis-
tic and feasible and that your stakeholders are as invested in reaching them as you are. Engaging
your end users, suppliers, providers, collaborators, and other stakeholders in the decision-making
process will help make the process less daunting.
Third, reflecting on the community attributes you have learned about during your initial and
ongoing community-driven research will help inform your decisions. Depending on the assets
available to you, including human, physical, and financial capital, and the efficiency of the systems
you are relying on for your value chain, you can estimate whether it is realistic to set a 100% target
(e.g., eradicating under five mortality in this community) or a nonabsolute target (e.g., reducing
under five mortality to a specified level, taking into consideration infrastructural factors, etc.).
Benchmarking against other settings is also advisable. What were other communities able to
reach? Has this challenge been completely eradicated elsewhere? What are the statistics in other
populations? Last but not least, consult your own experience and the experience of your team and
wider community. What could go wrong, what external factors are beyond your control, what are
the strengths and weaknesses of your team? In the next chapter, we’ll talk more about assessing
these risks and external factors that can help you evaluate and refine your targets to ensure that
they not only reflect what is physically and hypothetically possible in the best case scenario but
also incorporate the most likely scenario depending on the environment in which you’re operating;
and to have contingency plans in place for the worst case scenario too.
To Be Ambitious or to Start Small?

Many social entrepreneurs struggle with two schools of thoughts when setting their targets: one
school of thought says to be ambitious, set high goals, and if you work toward those goals, you
will achieve more, even if you don’t get to the ideal number you’ve aimed for. The other school of
thought says to start small, pick a number you can definitely reach, it is better to under promise
and over deliver. What you choose to do depends on your own leadership and management style,
but it is definitely recommended to retain scientific integrity when selecting your targets: make it
your goal to actually find the number that is likely attainable.
Remember, this is not a personal exercise; if you build your social venture in the way that you
would conduct a personal project, you are at risk of failing those around you. Valuable resources,
both human and financial, are being dedicated to realizing your targets. The best way to opti-
mize these resources—and increase the chance of having more resources at your disposal in the
future—is to aim for accuracy when selecting your target, neither overprojecting nor underpro-
jecting. Both extremes are commonly observed among social entrepreneurs, and this is a common
mistake, so try not to make it, for the sake of those around you if not for your own.
Setting Up an M&E System

As your organization grows, one or more team members may become specialized in the role of col-
lecting and assessing impact metrics. Your M&E framework may start out as a simple spreadsheet
sheet in which you manually enter information collected by paper surveys distributed in your
community, for example, listing the names of your participants/customers/patients/end users and
the characteristics you decided to collect information on (these could include gender, age, employ-
ment status, occupation, starting income, income over time, other social metrics as determined
by pre/post surveys, etc.). With time it could evolve into a more automated software or system
requiring more than one team member.
The first step is the monitoring, where you collect and analyze data. Setting up your monitor-
ing system involves choosing your targets, deciding how you are going to gather information on
these targets, where you are going to store this information, and how you are going to summarize
and characterize your results in order to use this information in your day-to-day management.
Evaluation is step two, where you compare the results against your initial targets. What did you
set out to do, what have you accomplished, and how did you accomplish it? It is important to
note that when you evaluate your social venture, you are evaluating not only outcomes but also
processes. Did you engage the target population in a way that empowered them? Do you need a
new strategy, or if you already have one, were you able to follow it, and did it work? Have your
resources been used efficiently and effectively? Are there any trends or patterns over time that
suggest that your operations and impact may not be sustainable? What are the stakeholder impli-
cations of your results? Indicators to answer these questions should be included in the data you
are collecting.
Monitoring and evaluation aren’t always discrete events. If you’re able to automate your data
collection and analysis, you should be able to constantly and continuously evaluate your perfor-
mance and progress by monitoring both process and outcome metrics that will inform your deci-
sions moving forward.
Assessing Your Results With Your Stakeholders

Measuring social impact isn’t just about obtaining the metrics, it’s also what you do with that
information afterward. Decision making and reflecting on the results are some things that take
place both internally with your team and with your external stakeholders. Part of your contribu-
tion as a social venture is not only the social outcome you are creating but also the knowledge you
are disseminating to the world. This allows us to assess the cumulative impact of multiple social
ventures working to tackle social and environmental challenges. Reporting your results, learning
from the overall process, and listening to the experiences of your stakeholders before, during,
and after implementation allow you to create a learning plan for where you want to go next.
Exchanging knowledge with other ventures and agents of change enables you to create a multipli-
cative rather than an additive effect.

Social impact metrics reflect the bottom line of a social enterprise, which is created to produce
change and positive motion. The metric is simply a tool that enables you to understand whether
you’ve reached your goal and whether you’re using your resources optimally. It enables you to com-
municate with your stakeholders, assess past progress, and plan for future work. At the end of the
day, your social impact metrics should be easy to collect, with minimal time and resources, inher-
ent to the operations required in your intervention, and aligned with your mission and vision.
Ensuring that your processes and outcomes are in line with your mission and vision means
that your social impact metrics will accurately reflect whether you’re fulfilling that mission and
vision. In the next chapter, we’ll complete your business plan by tying together the different com-
ponents of your business model that you’ve created up until now: characterizing your challenge,
co-creating with the community, designing your solution and theory of change, operationalizing
that theory, and selecting your social impact metrics. This will empower you to tie your bottom
line of social change with the support structures required to get there, which we’ll cover in the
last few chapters: financing, organization building, communicating, external partnership, and
expansion.
Exercise: Measuring Success

You knew this moment was coming! It’s time to roll up your sleeves and crank out those impact
metrics. That’s right, before you move on to the business planning chapter, you are going to write
down what success looks like to you and how you are going to measure it:
1. What is the social outcome you are working toward? (You can pull this up from your theory
of change assignment from the last chapter.)
2. Write down one or more SMART objectives that you think you can reach toward that goal.
Remember, the less the better to start out, in terms of the number of objectives.
3. How will you measure your progress? Write your key impact metrics in one sentence each
and summarize the processes, tools, and systems you will use to collect data for this in
another sentence. (You can write down more than one sentence for each in your own records,
but make sure to come back and summarize each in one sentence for this chapter challenge.)
4. What is the baseline? How much progress against the baseline will you aim for? You can
choose your own timeframe in answering this question. It can be a long-term goal (10 or
20 years) or a short-term goal (5 years or less). The way to get there is to go back to the assess-
ments you’ve already conducted, such as your asset mapping, talk to any stakeholders you
can, and compare with what other people have been able to do in other settings.
5. What outputs will you need to produce to reach this target? List the outputs by objective.
You can use the logframe template if this helps.
6. What inputs are needed to produce those outputs? For each input, estimate the cost and
time needed. Include human resources, physical resources, financial, and other resources.
Try to be as specific as possible. Yes, this is a huge assignment! In the next chapter, you are
going to complete your business model, so be prepared!
CHAPTER SUMMARY
◾◾ In a social venture, the bottom line is the social change you are working to create. It’s
up to you to define what success looks like and how you’ll know when you get there.
◾◾ Standardized social impact metrics exist, and it can be helpful to work with these in
case you find yourself being compared with other social ventures in the future (for
example, by a funder). But you don’t have to—you can make your own!
◾◾ When choosing your impact metrics, find something that’s easy to measure without
being costly or taking too much time and that can be measured inherently as part of
your work rather than as extra work.
◾◾ Although you’re focusing on capturing the social outcome you’re working toward, you
may need to capture intermediary outcomes along the road so that you can evaluate
progress, if your outcome takes a long time to change (which most do).
◾◾ You’ll also need to measure the “control knobs” of how you’re trying to achieve your
goal, so that you can adjust these if needed. These are the process metrics, as opposed
to the outcome metrics. Both are considered performance metrics, only the latter indi-
cates social impact. Measuring inputs does not indicate impact.
◾◾ To flesh out your inputs, outputs, outcomes, and impact, it’s helpful to use an organi-
zational tool such as a logical framework. This helps you operationalize your theory of
change and gets you ready for business planning.
◾◾ At the end of the day, you are monitoring your progress in order to evaluate your work,
decisions, and actions—not just for the sake of it. Measure what you need.
Company profile: Nuru, www.nuruinternational.org.

Founded in 2008 in Silicon Valley, California.
Product/service: Nuru International is building the world’s first self-sustaining, self-scaling,
integrated development model to end extreme poverty. It equips the poor living in rural
areas with the tools, skills, training, and guidance needed to lift themselves out of poverty.
Goal: Enable people to lift themselves out of extreme poverty in remote rural areas.
How it works: By analyzing the past 50 years of international development, Nuru has
identified a sustainable development model, which includes four key phases: (1) instead
of what, start with who. Nuru identifies the most promising community leaders and then
mentors and equips these leaders with essential skills. (2) The leaders identify the most
pressing issues, data are collected, and baselines are established. (3) The leaders are provided
a toolkit of proven poverty interventions; they chose what will work best in their context.
(4) Successful local business people are recruited to start businesses that will fund the pov-
erty fighting work and scale to neighboring communities. Throughout these phases, Nuru
provides world-class training and access to new markets/capital. When Nuru leaves, the
community is self-reliant and sustainable.
Case Study: Nuru International

Nuru is an example of a social enterprise that was designed around evidence tried and tested in the
field, centered on poverty reduction in remote rural areas. Building on the work pioneered by pov-
erty alleviation researchers around the world, Nuru added their own business model and integrated
existing impact metrics to pave the path for scale. How did all these elements come together?
It all starts with the local community. In Nuru’s poverty eradication model, they start with
a clean state with individuals within a village. Nuru’s team spends time in the village to identify
local leaders and form an on-site team. Members of the new team then undergo leadership train-
ing to equip them with knowledge and skills to thoroughly assess community needs and co-create
impact programs that are locally relevant, scalable, and sustainable (Figure 7.3).
Integrated impact programs

Nuru
social
Hunger
enterprises
Inability to cope with economic shocks
Preventable disease and death Fully

Leadership equipped
capacity leader
Lack of quality education for children
building
Fully equipped:
1. Able to identify gaps in four key areas of need
2. Able to design sustainable, scalable solutions based on best practices
and lessons learned that create measurable impact
3. Implements, manages, improves, and scales these solutions
4. Able to innovate past challenges (redesign) as they arise
5. Access to a reliable, market-based capital source for sustained operations and growth
Figure 7.3 Nuru’s impact model.
The leadership training is based on the premise that people living in poverty are marginalized
by discrepancies in power and that international development programs don’t work because local
leaders see themselves as beneficiaries instead of change agents. Nuru’s goal is for local leaders to
run a community development organization that is financially self-sustaining. Nuru works with
local leaders to become effective managers, solution builders, decision makers, and problem solv-
ers. The team then works together to remove physical and psychological barriers preventing effec-
tive solutions and to design and implement impact programs that equip communities to overcome
the obstacles and environmental disruptions to ensure that these solutions are long lasting.
Impact programs fall into four main themes: agriculture, financial inclusion, health, and edu-
cation. As an example, in Kenya, Nuru’s local team developed an agricultural program that pro-
vides a package to farmers including a farm input loan with seeds and fertilizer, technical training,
extension services, and group support structures. Farmers finish repaying their loans after harvest
and take their surplus produce to market with the assistance of Nuru’s local team.
Nuru’s local team also provides financial literacy training and one-on-one coaching to
strengthen the money management skills of farmers; and supports farmers to form a savings group
that creates access to basic financial services, namely, savings and loans. Nuru Kenya healthcare
field officers provide home visits in which they deliver tailored information on disease preven-
tion and offer affordable commodities such as soap, water purifiers, and bed nets. Nuru Kenya
Education provides remedial education at rural primary schools, along with teacher training and
curriculum development, to strengthen local schools and improve education outcomes.
These impact programs are funded by revenues from Nuru Social Enterprises, a holding com-
pany that invests in local entrepreneurs in the countries where Nuru works and incubates local
business ventures that can return a profit both to shareholders and to Nuru to fund the impact
programs. Examples include dairy, poultry, honey, and consumer products (Figure 7.4).
Nuru’s team developed an M&E strategy with program indicators based on Nuru’s logical
framework. While certain parts of the logframe were easy to measure, such as the outputs, which
are tangible, direct products of program activities; the long-term outcome proved far more chal-
lenging. How do we know that Nuru is achieving its goal of eradicating poverty? Nuru’s M&E
director, who developed the strategy, referred to this as measuring the “parts” versus the “sum
1. Investors
3. Shareholders
Profit (minority %)
apital investment program funding

2. C pact
Im
4.
Nuru Social
Enterprises
Kenya
Nuru
3. Profit (%)
Social
Enterprises
U.S.
Holding company
Nuru Social
Enterprises
Ethiopia
2. C
apital investment
4.
Im
p ac
t prog g
ram fundin
3. Shareholders
Profit (minority %)
Figure 7.4 Nuru’s business model.
of the parts.”* The parts refer to the outputs, which are tangible, direct products of program
activities. These were measured by indicators for each program area such as agriculture input loan
repayment rates, savings deposits, group savings loan repayment rates, literacy and reading com-
prehension in children, and adoption of healthy behaviors leading to saved lives and saved money.
(The latter included 12 health behavior indicators such as treating water, using a latrine, sleeping
under a mosquito net, delivering in a clinic, and having newborn consultations.)
Poverty reduction is one of the most complex outcomes to measure, because it is

multid imensional.
While these outputs are already directly linked to the ultimate outcome of poverty alleviation,
Nuru’s team was intent on measuring the sum of the parts in order to understand and optimize
the composite impact of the programs on poverty. Here, the team emphasized the importance of
finding a tool that aligned with their definition of poverty. Nuru’s team selected the multidimen-
sional poverty index.† Other commonly used tools are the multidimensional poverty assessment
tool‡ and the progress out of poverty tool.§ Poverty reduction is one of the most complex outcomes
to measure because it is multidimensional. Social ventures such as Nuru, which tackle multiple
dimensions of poverty, are tasked with assessing their impact on both the parts and the sum of
the parts. Other social ventures that we will visit in other cases may focus on one pathway, such as
income, health, education, energy access, etc.
* http://www.nuruinternational.org/blog/monitoring-and-evaluation/lessons-learned-measuring-parts-sum
-parts-poverty-alleviation/.
† http://www.ophi.org.uk/.
‡ http://www.ifad.org/mpat/resources/mpat_brochure.pdf.
§ http://www.progressoutofpoverty.org/about-us.
But measuring impact is only the first step. This is referred to as monitoring, which tells us
whether Nuru has made a measurable difference. Evaluation of the program then requires assessing
whether the program is on track to meet its objectives or whether it is ahead of or behind schedule;
understanding why and making adjustments in the planning and implementation accordingly. It
also requires constantly checking to ensure that the programs and the corresponding monitoring
tools are relevant to the local community or whether they need to be adjusted.
Another part of the evaluation process is thinking about whether this program and these
results are scalable. This involves asking yourself whether these could be applied to other areas of
your work and in other settings and locations. Last but not least, will they last? To answer this
question, Nuru’s team developed a financial sustainability ratio and a leadership sustainability
index (Figure 7.5).
Getting results was one thing, but making sure they would last was a whole other ballgame. To
assess financial sustainability, Nuru’s team compared expenses of the impact programs with profits
from Nuru Social Enterprises (Figure 7.6). Operational self-sufficiency was defined as the ratio of
revenues to expenses; for example, if the social enterprises achieved 100% cost recovery, then they
had an operational self-sufficiency of 1. While this meant that they were able to generate enough
revenues to cover their own costs, this ratio would not allow them to also support the impact
programs. Thus, operational self-sufficiency requires the social enterprises to achieve more revenue
than expenses so that excess revenue can be distributed both to investors and to the impact pro-
grams. The financial sustainability ratio was defined as the profit of the social enterprises (revenues
minus cost) divided by the expenses of the impact programs in the same country. For example, if
the social enterprises in Kenya covered all the costs of Nuru Kenya’s impact programs, then the
financial sustainability ratio would be >1.
Does the program meet the needs of Nuru communities?

Relevance Nuru’s program planning process and values around co-creation ensures we are community responsive
and working to address needs as defined by the community.
Is the program on track to meet its objectives?

Effectiveness Nuru’s monitoring system tracks progress of our operational effectiveness (against targets) and
iterates when data informs us of a problem.
Impact Has Nuru made a measurable difference?

Nuru’s evaluation system is structured to assess the social impact Nuru is making in the lives of its
(social)
target populations. Where it makes sense, Nuru considers attributable impact.
Is the program scalable to other divisions?

Scalability Nuru upholds data-driven, evidence-based decision making and does not scale to other divisions until we
are confident our programs are effectively rolled out, demonstrating social impact and replicable.
Will benefits continue after Nuru’s exit?

Nuru’s exit strategy is rooted in building leadership and financial sustainability. Financial
Sustainability sustainability, based on our social enterprise strategy, is measured through our financial sustainability
ratio (FSR). Leadership sustainability, based on our leadership development strategy, is measured
through our leadership sustainability index (LSI).
Figure 7.5 Nuru’s criteria for assessing impact.

When will Nuru International (NI) field staff exit?
• NI’s exit strategy consists of impact, leadership sustainability, and financial sustainability.
• NI staff will exit completely when all three exit strategies are met.
a b c
Leadership Financial
Impact
Sustainability Sustainability
• Decision based on positive • Decision based on the • Decision based on

trends in all four impact leadership sustainability financial sustainability
programs (agriculture, index (LSI). model, built by social
community economic enterprises.
development, healthcare, • LSI is a weighted numeric
and education). score based on evaluation • Concept: when social
metrics that are used to enterprises’ profit can
• Consists of core program cover operating expenses
metrics, not all metrics indicate when local
of NK and fuel expansion
Nuru uses to evaluate its leaders are achieving the
to the next district, NI field
programming. necessary milestones to
staff and funding can exit.
operate the organization
independently.
Figure 7.6 Measuring impact is only the first step.
But money isn’t everything. In order for the social impact to be sustainable, local leaders must
be able to operate and sustain their organization independent of international staff. This is where
the central pillar in Figure 7.6 comes in: leadership sustainability. Nuru’s M&E team created a
leadership sustainability index, using a number of measurement tools (Figure 7.7).
Once Nuru’s team has enough evidence to indicate that they had helped create the desired
impact and that it was sustainable both financially and through local leadership, then they will
make the decision to exit. Thus, the M&E was created to inform decision making, not just for the
sake of it. To equip themselves to use these results in a systematic decision-making process, Nuru’s
Data collection Purpose of tool Type of tool Who it’s When is

tool administered the data
to collected?
Postassessment To assess staff after leadership Written test taken All levels (levels After each
trainings on understanding of main by staff members 1, 2, and 3) leadership
concepts taught training
Staff in-person To assess staff ’s readiness for Nuru Oral self-report All levels (levels Once a year
international’s exit from the project survey, 1, 2, and 3) (usually in
survey June)
administered by
M&E team
Performance For supervisors to assess staff on Written human All levels (levels 2×/year; June
performance of specific job resources 1, 2, and 3) and December
evaluation
responsibilities assessment on
staff performance,
filled out by
supervisor
Staff leadership For supervisors to asssess staff on Written Field managers, 2×/year; June
various skills necessary to operate assessment on district managers, and December
review
the project independent of Nuru staff performance, and senior leadership
international staff (not assessed filled out by (levels 2 and 3)
through performance evaluations) supervisor
Figure 7.7 Data collection tools to inform Nuru’s leadership sustainability evaluation.
team developed a dashboard that helped their leadership visualize all the results, “the sum of the
parts,” to inform next steps and strategy.
Nuru’s M&E director at the time, Veronica Olazabal, pointed out that assessing progress
toward impact is complex and requires the use of a combination of lenses. But not everyone will
need a 10-indicator composite index for social impact, complemented with two additional indices
to determine the sustainability of that impact over time! Nuru’s case is one of the more complex
in terms of multidimensional impact measurement and evaluation. Your social venture will prob-
ably not require so many moving parts. Nuru is still a young venture and has still not reached the
desired impact, although preliminary evidence indicates that it is well on its way. The reason it
has been selected is to demonstrate that no matter how elusive measuring impact can seem, there
is always a way to reflect success in progressing toward your goal and the social outcomes you are
working to improve.
Chapter 8
Completing the
Business Model
Over the past few chapters, you’ve been taking key steps to build your business model. This starts
with your value proposition, the 5Cs and 5Ps of your market plan, the nuts and bolts of your oper-
ations and distribution, and your social impact targets. These components of your business plan
have been developed with the goal of maximizing your impact while ensuring financial viability.
Now, it’s time to put it all together and make sure the numbers add up!
Your complete business model ties together the different parts of the equation that you’ve been
hard at work figuring out. It answers the following questions:
◾◾ Who is your customer?

◾◾ What are you offering to them?
◾◾ How much will they pay?
◾◾ What is this costing you?
◾◾ How will this exchange take place?
There are numerous business models that other social entrepreneurs have employed before
you—or you can invent your own! We’ll explore some examples together, to give you a sense of
how others have made it work, and then you’ll find what works for you. The key is to calculate
what resources are needed and what opportunities you have to cover those resources. Your busi-
ness model is basically a combination of your impact model (how you make change), your revenue
model (how you make money), and your cost reduction strategy (how you keep costs minimal).
Building Your Budget

The Basics
Let’s start by making sure we’ve covered the basics of cost and revenue. In Chapter 7, you devel-
oped your organizational framework by planning ahead the various outputs you need to produce
155
in order to meet your objectives as well as the inputs (activities, people, time, money) that will
be required to produce these outputs. The next step is to create your start-up budget. A budget is
simply a table that organizes the various costs.
Costing is the process of putting a number on all the resources you require. How much will it
cost you to reach your objectives? Start with your first year. Who do you need to hire, what equip-
ment do you need to buy, how much will you need for transportation, utilities, physical spaces?
All you need to do is check back in with the organizational framework you created in Chapter 7,
which has listed the main steps you need to take. Then ask yourself, is it missing anything? Are
there any costs not directly associated with a specific output but are just general or administra-
tive costs required to run this venture? Don’t forget about communications: building a website,
hiring someone to maintain your social media, etc. Legal, accounting, and filing costs should be
included—if you’re going to register a new organization, you’ll need technical support on that,
you’ll need to file for taxes, and these all require a budget.
To create your budget, you simply organize your costs into a table. This is usually done in a
simple spreadsheet, using basic computing software. It’s helpful to organize your costs by cat-
egory; for example, how much will you need for recurring costs compared with starting capital?
Starting capital means money that will be invested upfront to get this venture going. For example,
it could be buying new equipment, paying for software, website or app developers, conducting
initial research, and other steps required to launch your venture. Recurring costs means ongoing
costs required to keep it going. Salaries are recurring costs, rent and utilities are recurring costs,
transportation and communication are recurring costs.
Recurring costs should be divided over time, so that you can calculate how much you will need
at different stages—for example, each month, each quarter, and each year. They should also be
divided into fixed versus variable costs. Fixed costs will recur regardless of your level of production.
Examples include your rent and base salaries. Variable costs will increase or decrease depending on
how much you are producing. Some salaries or extra payments may have to be added, for example,
if more people are needed. You might spend more on utilities, communication, and transportation
if you have a larger volume of work. This is good! It means your operations are growing! You just
have to be sure that you’ve factored it in.
Planning your growth costs is also advisable at this point. Depending on your distribution
model, you need to think ahead about how much each stage of growth will cost. How much will
each new branch, franchise, or point of sale cost you to launch and then to maintain? Different
sites might have different fixed and variable costs, depending on location and other factors. When
you are forecasting your costs and revenues, it’s important to think beyond just your pilot. While
expanding your operations is costly, at the same time, in many cases, it’s also a requirement for
financial viability.
Forecasting Growth
You can create separate budget tables for each point of sale or service, as well as a central table
that analyzes the combined costs and revenues to determine the overall financial viability. In most
cases, your largest costs are the initial start-up costs of developing and testing your venture, and
the relative cost of starting each new point of sale or service decreases over time in relation to
the revenues they will bring. This is what we refer to as economies of scale. In many cases, grow-
ing and reaching large volumes are the only ways you can get your revenues to cover or exceed
your costs. In other cases, it might be the other way around and your optimal operating size
might be smaller. This could be the case if you grow into new markets—whether geographic or
Completing the Business Model ◾ 157
demographic—where your model is less effective. It could also happen if you grow too soon and
don’t have the sufficient processes and human resources and, as a result, you end up losing time
and money to fix it.
Like everything else in your venture, your business model and your growth model need to be
evidence based. Research each growth scenario to get the forecasted costs and revenues for your
growth plan. Question the assumptions behind each forecast. You’ll never have all the data you
need, but at least you can do your best to make your estimates based on data from the field. This
will allow you to compare different scenarios and evaluate the financial viability of each.
Cost per Unit

A useful figure to calculate is your cost per unit. If you are providing a service, your unit might be a
person (cost per person served). If you are providing a product, your unit will be the product (cost
per product served). If you want to get really creative, you can even calculate the cost per unit of
your social impact metric. For example, let’s say your social venture is aimed at job creation, and
your bottom line is the number of jobs created. What is your cost per job created?
In most cases, you’ll want to include everything that goes into developing the product or service
(before it is manufactured or offered) and everything that goes into selling or providing it to the
customer. Sales, marketing, transportation, communication, and distribution costs are all included.
Most of the time, the more units you create, the smaller the cost per unit becomes. This is because
all these costs are divided by a larger number of units. So volume is usually a good thing from
the point of view of costing. And different distribution scenarios might allow you to reach differ-
ent volumes—so it’s not only the starting costs that you need to take into consideration but also
the economies of scale over time. If you want to calculate just the cost of the good you’re selling,
without the development and sales cost, this might also be a useful statistic to have—we refer to
it in business shorthand as “COGS” and you’ll see it later when we talk about income statements.
Your costs are usually incurred before your revenues. This is simply because it will cost you
something to produce your product or service before you are able to generate revenue. So you need
to make sure you’ve budgeted enough and raised enough starting capital. This involves calculating
how much revenue you think you will make, and when.
Revenue Models
Here’s where it gets interesting! You’ve done everything you can to minimize costs, and now it’s
time to make sure that your revenues cover your costs. This is the make or break of a financially
viable venture. The first component of a revenue model you’ll look at is pricing. The interesting
thing about pricing is that it’s not always as obvious as it seems. Many people might assume that
a social entrepreneur should price their product or service at cost, charging the minimal amount
possible to keep your operations going. However, in most cases, your pricing should be informed
by your market research. What did your market research tell you? How much are people willing
to pay for a unit or package of your product or service?
How you bundle your offering is one control knob in your revenue model that you can play
with. How people pay for it is another aspect. Will you need to finance it, or will it be an upfront
payment? Are people paying in cash, or are other forms of payment more preferable in your target
audience? We’ve learned that it’s not only the product design that’s piloted, it’s also the pricing
and revenue model. Did you roll out a “test batch” and get customers’ feedback? Have you tried
different price points and payment methods? These are the data that will help you build a finan-
cially feasible system around your solution.
One scenario to be prepared for is that in some cases, even if you were able to get your
costs down to the lowest possible level, it might still not be low enough for your target audi-
ence. In this scenario, you would need to find ways to make up for your losses—that part
of each unit’s cost that won’t be covered by its price. Differential pricing is one way to make
up for these losses, by offering the same product or service to different audiences at different
prices. We’ve seen this with One Earth Designs, Aravind Eye Care Systems, and many others.
Diversifying your revenue streams is another way to make up for these losses, by offering a
range of products or services that may be more profitable, to help cover your costs. You can
also supplement your revenue from sales or fees, with other forms of revenue such as grants
or donations. These are three different options for subsidizing the cost of your product or
service to your target audience, if needed. But even if you have to go for one of these options,
you’ll still need market research to determine what the optimal price is to get your end users
to value your product.
Scenario Analysis
Right now, you’re probably asking yourself some very important questions. The first might be: how
can I put together my starting budget if I’m still exploring various scenarios to make this all work?
The answer is that it’s not only possible to compare costs and revenues for different scenarios, it’s
also necessary that you do so at this point. This is all part of testing different prototypes for your
delivery model! You already know that all the scenarios you’re exploring operate within the context
of your social goals—they’ve all been developed around the solution you’ve built with your end
users. Comparing the costs and revenues possible for each scenario is one of the most important
things you’ll do at this point to assess feasibility and find a viable path to take in moving forward.
You can make one table or tab per scenario, to compare the financial feasibility of each. You’ll
need different resources for different options; for example, branches versus franchising or manu-
facturing centrally or decentralization, etc. You’ll also have different revenue opportunities in each
scenario, and you’ll need to compare various combinations of each until you find one that you feel
comfortable getting starting with.
The iterative process is ongoing. Even at this stage, you might have to go back to the drawing
board with many aspects of your social venture. This is not something to be discouraged by; it’s
something to be reassured by, that every social entrepreneur has had to do this! If the numbers
don’t add up, you keep innovating, designing, brainstorming, prototyping, and testing different
options until they do. Assessing different revenue models can take multiple iterations before you
can get the revenues to cover the costs.
Pro-Forma
An income statement allows you to combine your costs and revenues to see how they add up. Just
like the budget tells you where you are spending your money and when, the income statement
tells you where you are getting your money from and when. If you have different products or
services that you’re testing, different locations, or different customer segments, you can organize
your revenue streams from each one. You can also note patterns and trends over time; for exam-
ple, your sales might peak during certain times of the year. Income statements, like budgets,
are also organized according to your sales cycle—the length of time it will take you on average
to get your product or service to your end user, and to get paid. This describes the life cycle of
each unit of product or service, telling you how long you’ll need to wait between incurring costs
and generating revenue. This could be by month, quarter, year, or something in between. Some
smaller ventures even summarize this information on a weekly or daily basis. Preparing your
income statement simply entails entering data on your sales and how much you made—think of
it as a form of financial inventory! You can either manually enter this information into a simple
spreadsheet using basic computing software or set up an automated system for tracking sales
and automatically entering revenues (similar to those you might observe at retail and service
points on an everyday basis).
Before you launch your venture, it’s helpful to create a “pro-forma” income statement
(Figure 8.1). This means that, although you may not have begun your revenue streams yet, you
can project and estimate the revenues you will be making. You can even try out different ver-
sions to compare various options for pricing and revenue models that you may be considering!
For example, what would my income statement look like if I went with option A versus option B?
Filling in the numbers here will require you to make certain basic assumptions such as the number
of customers you are projecting.
Again, use the evidence you’ve collected in the field to inform these assumptions. Try to be as
realistic as possible and estimate the most likely scenario. Then, take it one step further and calcu-
late your best- and worst-case scenarios. How do these compare to your most likely scenario based
on your market research? Is it a wide margin? What can you do to prepare for a less-than-optimal
outcome? While we are taking all the measures that can get you to your most likely scenario (or
better!), we also need to make sure you’re prepared for the worst-case scenario. It’s usually recom-
mended to make conservative estimates and to make sure that you’re prepared with a financing
plan to get you through lower-than-expected starting numbers.
When you are done estimating your revenues, you subtract your costs to calculate your profit.
If you are using your total cost per unit sold, then the difference will be your net profit (overall
Q1 Q2 Q3 Q4 Total in the
first year
Sales + + + + +
COGS − − − − −
Gross profit
Shipping and − − − − −
logistics
Marketing and − − − − −
customer
acquisition
Product − − − − −
development
General and − − − − −
administrative
Total
operating
expense
Pre-tax ? ? ? ? ?
income
Figure 8.1 Example pro-forma income statement template.

profit) once you remove taxes. If you are using your COGS, then the difference will be your gross
profit—you’ll have to then subtract operating expenses and other expenses to get your net profit.*
This is the last line at the bottom of your income statement, which is where the word “bottom
line” originally came from!
You’ll notice that the sales bring in positive cash flow, while the other lines in the income state-
ment incur negative flows (various costs and expenses). Question marks have been placed on the
bottom line of the template because you’ll need to determine what the resulting balance will be.
When you first start, your balance might be negative, which means you’re not generating enough
revenue to cover your costs. This is normal and healthy! As you proceed and your customer base
grows, you’ll start covering your costs and achieving a positive balance. Any surplus revenue can
be used to fuel growth.
When you reach that point where all costs are covered, this is called breaking even. It’s impor-
tant to estimate your breakeven point in order to plan ahead and secure enough funding to fuel your
own growth before the revenues start rolling in! This template provides an example for the first year,
but your pro-forma will most likely need to include multiple years. Most new ventures take several
years to break even; a common breakeven point is three to five years, and in some cases longer. This
is because so much time is invested in getting to a point where the venture is self-sustaining.
Timeline and Phasing

Phasing refers to the different stages your venture will go through. Upon launching, your costs will
exceed your revenues until you reach the breakeven point. The breakeven point is when 100% of
your costs are covered by revenue. Your business plan should include a timeline indicating at what
point you estimate you’ll break even. Again, it’s usually not realistic to expect to break even in the
first or even the second year. The importance of phasing is reflected not only in your budget and
income estimates but also in various aspects of your business planning as it pertains to funding
rounds, marketing strategy, and organizational strategy.
Timeline and growth strategy refers to how you plan on expanding your venture before and
after you break even. Some ventures will not scale their operations right away once they break even
but will take the opportunity to evaluate success indicators and operational indicators and accrue
income to fund expansion. Expansion might entail the production of more products/services, the
cost of a marketing or advertising campaign, the hiring of additional staff. Other ventures will
apply for a new round of funding to fuel the expansion, effectively pushing back their breakeven
point by once more having their investments exceed their earnings, until the increased earnings
come in. Yet others will have an expansion plan that pays for itself, especially in situations where
increased production results in larger profit margins due to economies of scale. In this case, the
breakeven point will not be achieved until you are able to expand your operations sufficiently. If
this is your most likely scenario, then you’ll need to plan accordingly and get the financial and
nonfinancial support you’ll need to make it all the way to the breakeven line! We’ll talk more
about these resources in the coming chapters.
Economies of scale have implications beyond the forecasting and budgeting of your growth;
they are also important to consider in your everyday operations and in planning your costing
* In addition to taxes, you may have other considerations to account for such as interest, depreciation, and amor-
tization. This is why you’ll often see the abbreviation EBIDTA used here, referring to: earnings before interest,
depreciation, tax and amortization.
and pricing. Thinking to your own personal experience, when you go to the grocery store,
you will notice that if you buy in bulk, the price per unit decreases. Similarly, a venture
that produces in bulk will have a lower cost of production per unit in most cases. The social
entrepreneur can decide whether to keep prices constant, in which case profit will increase, or
whether to lower prices if this may result in more people accessing the product or service or
even whether to increase prices if this is part of the growth strategy. Some ventures can choose
to start at lower prices in order to gain a market and then increase their prices for certain seg-
ments of the market if this will result in increased financial sustainability while continuing
to reach the target audience, especially if they experience customer segmentation amenable to
differential pricing.
Staying Lean
We’ve already talked about designing for affordability, about the different dimensions of poverty,
and the AAAQ checklist. Remember that you are working in a setting where the market has failed
to provide a solution for this social challenge. As you build your business model, operations, and
other components of your social venture, keep this in mind. You need to be a lean, mean solution-
providing machine!
Being lean simply means that you stretch out your resources to the max and set yourself up
such that you get far with few resources. You are looking for the distribution channels, administra-
tive setup, and other characteristics that will allow you to operate at low cost. Of course, you are
also looking for revenue channels that will cover your costs and allow you to grow—it’s a balanc-
ing act with multiple levers.
The coming few chapters will be infused with tips and techniques to stay lean: where to situate
yourself physically, how to hire lean and outsource where possible, and how to mobilize resources
creatively. For now, this is a shoutout to keep in mind while developing your business model and
business plan that you don’t have the luxury of building anything that is not as literally lean as
possible.
Business Models
Ideally, you would like to have a revenue model that allows you to maximize your social impact
while covering all your costs and more. To maximize your social impact, you would then rein-
vest as much of the profit into your mission as possible. In some cases, however, the nature of
the market is such that profit is not possible. In these cases, the social entrepreneur needs to
generate multiple revenue streams to supplement sales. In all cases, a social entrepreneur devel-
ops a business model with the goal of maximizing social impact. This is why you’ve invested so
much time learning about the social challenge you’re tackling, the population segments you’re
serving, the theory of change that ties your product or service to the social change you’re creat-
ing, and the impact metrics that you’ll follow to track and maximize this change. The business
model then comes in to allow you to maximize those targets because you need money to make
it happen!
Let’s take a look at some of the different types of business models out there. As we learn about
the different models and the thought process behind them, keep in mind that there is no one
method or one correct way to maximize impact. There are different points of view, and different
people have approached their own social ventures in their own ways. It is up to you to figure out
what model will fit your goals and your theory of change and help you reach the social impact
targets you’ve set out for yourself.
High-Profit Business
High-profit businesses are rare in the social sector because we are often dealing with market
failures and inefficiencies that created the social challenges we’re trying to improve in the first
place. Most social ventures are targeting underserved and marginalized populations, trying to
provide them with basic goods and services such as education, health, water, energy, information,
and other needs. This is what differentiates social from commercial entrepreneurship after all!
However, some thought leaders point out that profit drives scale and that if you can make even a
small margin of profit multiplied by millions, if not billions, of people, then you will have a high-
profit business (see Interview Box 1). One business model that can result in large profits for a social
venture is a low-cost, high-volume model. This means that you’re aiming to serve a large number
of people at a low cost, with the profit margins aggregating to form large overall gains. If you can
achieve this business model, then great! You can serve more people. The important thing is to
keep in mind your number 1 goal, which is to maximize your social impact and work toward your
social mission—in most cases, this will mean reinvesting the profit to grow the social venture.
Nondividend Social Business

Reinvesting the profit to grow the social venture means that you are operating a nondividend
social business. This means that it’s possible for the entrepreneur and supporters to recoup the
costs associated with launching the venture, but it’s not possible for them to use the business for
their own personal gain. This doesn’t mean you can’t make a respectable living as a social
entrepreneur—no one is asking you to live in poverty. Growing your venture will require you to
attract and retain top talent, and you’ll need to pay them too! It just means that all decisions are
made with the goal of maximizing social impact. Most social ventures we’ll learn about through
the case studies in this book are designed as such: they employ business models to generate as
much surplus revenue as possible within the goal of maximizing their social impact, then use the
profits to fuel the continued growth of their work and their operations to have the highest impact
possible (see Interview Box 2). Again, the number 1 driver of your growth should be the change
you’re aiming to create in the social challenge you are setting out to tackle, as specified in the
theory of change and impact targets you have developed.
Not Always Mutually Exclusive

If you’re able to generate enough aggregate profit to qualify for investors seeking both social and
financial returns, this can be a powerful tool to fuel growth. So, the two previous business models
aren’t necessarily always mutually exclusive—it really just depends on the scenario. The main
point is that in social entrepreneurship, profit is a means to an end—it is not an end in and of itself.
Hybrid Models
If your product or service does not pay for itself, then you are faced with a situation where you are
not able to recover all of your costs. In this situation, you have a number of options. You can either
diversify your product or service mix or diversify your customer segments. Some nonprofit orga-
nizations find different services they can provide in order to cross-subsidize their social mission.
Others offer their core product or service to a higher-paying customer, to cross-subsidize those
customers who are unable to pay the full cost of the product or service. These options are referred
to as hybrid models. By combining the different revenue streams, they are able to add up to cover
their costs. Most hybrid models aim to break even, using their secondary value chains to cover the
costs of their primary value chains. But some hybrid models find that there is a huge opportunity
to profit using their secondary chains, which can fuel the growth of their primary mission. The
important thing is not to distract resources, time, and attention from the primary mission if you
don’t have to.
Another form of hybrid model is the nonprofit model where non-trading revenue streams (such
as grants and donations) are used to supplement sales from the primary product or service. This is
a highly risky business model, as grants and donations are not guaranteed. They may certainly be
used to fuel your start-up costs, and often, your ongoing research and development costs. But ide-
ally, what you would like to have is a product or service that is somehow tied to a revenue stream
directly related to providing that product or service to your end user. Challenge yourself to find a
business model that is based on trading activity. This means that either:
◾◾ Your end user is able to pay the full cost (or more) in exchange for the product or service;
◾◾ Another end user pays a higher price to cover the cost of your target audience;
◾◾ You have a range of products or services whose revenue streams add up to cover costs; or
◾◾ You have multiple stakeholders partnering to contribute various resources, each in exchange
for a benefit to themselves (e.g., public–private partnerships).
If you are unable to cover the costs of delivering your social mission using one or more of these
models, then you can supplement it with a set of non-trading revenue streams, achieved by apply-
ing for grants, securing ongoing donors, holding fundraisers, etc. However, as a general rule of
thumb, the more you can minimize your reliance on these sources of revenue, the more sustainable
your venture will be in the long run.
Interview Box 1. Jigar Shah, President of Generate Capital,

Former CEO of Richard Branson’s Carbon War Room, and
Founder of Sun Edison
TC: Jigar, you use innovative payment schemes to spread the use of
solar power. In developed settings, you used carbon wedges,
which entails replacing existing cars or existing sources of
energy. Does this also work in settings where people don’t
have cars and aren’t on the grid?
JS: Absolutely. Take mobile phones for example. There are 5 bil-
lion people with mobile phones. In some places, they have
to travel 5–10 kilometers to charge their phones. The per-
son with the diesel generator is charging them pennies to charge their phones, the
equivalent of $5–$10 per kW/hour in the US. Same for electricity inside homes.
People use kerosene, charcoal, and wood; while the solar lantern is 80% cheaper, pays
for itself in 6–12 weeks.
TC: Do you think that there are some populations that just can’t be reached by this
approach, where a non-profit approach is necessary?
JS: A lot of people say that social enterprise should reinvest all profits into the social mis-
sion. I think that if you want the private sector to have a positive impact, you need to
be aware that in the private sector, profit drives scale. A nonprofit microfinance group
can charge a lower interest and have a shorter payback period. But it still can’t reach
everyone. We’ve been waiting for the World Bank and others to provide essential
basic human services to marginalized populations for decades and still not everyone
has been reached. The private sector has to get involved. If you compare a for-profit
company like Compartamos with any traditional social business, you’ll see that just
like the nonprofit, a portion of the interest it charges goes to cover the overhead and
collection costs—the main difference is that the additional interest it charges goes to
investors. Because it charges a higher interest, there is a longer payback period, but it
has the same impact.
TC: What about in situations where it’s just not possible to profit? How do you scale essen-
tial services in those settings?
JS: This is where the government comes in. The government can help cover risk or subsi-
dize costs in sectors where there’s not enough profit, to encourage private sector play-
ers. Nongovernmental organizations can also do this, like what Rockefeller is doing.
Intergovernmental agencies have done this before. The IFC made 25% financial return
on investment to spread the coverage of mobile phones. They spread mobile phone
coverage by investing through funds, and the funds made 25%, 40%, 50% return on
investment. Look at Mo Ibrahim [Celtel]—he set out to produce social good, and he’s
a billionaire. Their goal was to provide people with access to information, and that’s a
social good.
TC: On the design front, do you think it’s possible to design social products and services
for billions of people across income brackets? Your approach is that large volumes are
needed. So far, most entrepreneurs target either those living in poverty or those not
living in poverty. Do you think it’s possible to think of it as one large market instead,
or should we be stratifying and segmenting?
JS: I think we need to stratify and segment. But we need to divide it into thousands
of segments, not two. You have people in certain places disassembling cook stoves
and using their parts for jewelry. Products need to be customized by culture, by
income, people react to them differently. The underlying technology, however,
doesn’t change.
Interview Box 2. Muhammad Yunus, Economics Professor,

Founder of the Grameen Bank, and
Recipient of the Nobel Peace Prize 2006
TC: Professor, you have advocated the social business model,

which means a nondividend business created to solve a
human problem. Do you think there are any limitations to
this model?
MY: No—there is no limitation; there are many human problems,
and at the same time, there is no limit to human creativity. If
you’d asked me 100 years ago whether humans will ever go to
the moon, I would have laughed at the silly question, like we
laugh now at many such questions. Human beings are packed
with creativity. The combined creativity of human beings has more than enough
power to take care of all the problems of the world. Right now, we’re busy applying
that power to make money. But if we apply it exclusively to solving problems, we
could have solved all these problems long back.
TC: Do you think big businesses can also solve social problems?
MY: They can, provided they create social businesses alongside their profit-seeking busi-
nesses. Social businesses generate profit, but owners don’t take it for their use because
the company is dedicated to solving human problems. In social business, owners use
all their creative power and the financial power to solving problems.
TC: So there are no market-driven solutions?
MY: Of course there is. Social business is a market-driven solution. But it is a mis-
sion-driven market solution within the market which is now almost exclusively
populated by personal profit seeking businesses. There is nothing wrong with the
market. Investors decide what they want to achieve by using the forces of the mar-
ket. Market is a playground. Players decide what game they want to play. Social
business plays for changing the world. Some others play for stacking up money for
themselves.
TC: What if you can’t create a market because some people just can’t pay? Let’s use refu-
gees as an example. How can you build a social business targeting refugees as your
customer?
MY: I don’t believe that there are some people who cannot pay. It is a question of giving
people the ability to pay, now or later. Grameen Bank lends money to beggars. They
give them the money to sell something and earn. They earn and they pay. Grameen
Bank lends money to the poorest people, particularly the poorest women. The repay-
ment is close to a hundred percent. It is all a question of how you design your business.
Poor people, like all other people, are smart people. They can choose the right option.
Refugees make up their own community, and their own economy, just like any other
community anywhere in the world. They bring skill, experience, and connections
with them. No war or violence can take it away from them.
TC: Let’s talk about scale. Most social problems affect millions, if not billions, of people.
Can the social business model reach them all?
MY: Global problems are nothing but accumulation of local problems. Once we find solu-
tion to a local problem, solving the global problem becomes a matter of repetition.
Small-scale solution can be expanded into sustainable mega solution if it is done in
a business way, particularly a social business way. In the medical world, we invent a
medicine, try it out on a few people, if it works, we take the step to administer the
medicine on millions of people to cure them from the same disease.
Uncertainty and Risk

Part of determining the feasibility of different options is assessing to what extent they’re influenced
by external factors. In some cases, external factors are positive—as we’ve discussed, there might
be opportunities for you to leverage existing frameworks to reach more people. In other cases, it’s
important for you to be aware of risks that may influence your success. And in all cases, it’s criti-
cal for you to characterize the uncertainty in your estimates. Some of your calculations might be
relatively straightforward, such as some of your starting costs. Others might have a large range
in between your best- and worst-case scenarios. When comparing different options, you’re com-
paring not only the most likely scenario or midpoint of these estimates but also how likely that
scenario will be and how wide the range of possibilities is.
Your decisions on which business model you’ll go with are largely personal. On the one hand,
your ultimate responsibility is to deliver the largest social impact possible as it pertains to the social
challenge and target audience you’ve characterized. On the other hand, many of these forecasts
have different degrees of uncertainty in them and we all have different levels of risk aversion.
Things to keep in mind are the following:
◾◾ You are already a risk taker by even getting to this point.

◾◾ There are ways to mitigate your risks and resources to help you do so, such as the organiza-
tions and networks in Box 1.1 and others we’ll explore in the coming chapters.
◾◾ The first step is to thoroughly chart out the landscape, and then together with your team and
stakeholders, you can make the decisions that feel right to you.
PESTEL Analysis
One way to start thinking about external factors is to conduct a PESTEL analysis. This framework
helps you organize your thoughts into a manageable set of categories and determine what aspects
of each category could be considered a threat and what aspects could be considered (or made into)
a positive factor.
While you cannot address all of the external factors surrounding you, it’s critical to be aware
of them and to take them into account while analyzing the risks you’ll face and building your
organizational strategy. You need to think about what you and your team will do differently to
mitigate the threat to your success posed by these factors and create contingency plans in case your
goals are derailed by these factors. Sometimes, there is nothing we can do to change the nature and
magnitude of external factors, but what we can do is adapt the design and implementation of our
intervention to respond to our external environment, while considering the various factors we have
to account for. Other times, we can be more ambitious and set an agenda to influence external
factors. This usually requires a huge amount of collaboration, advocacy, and hard work over a long
period. So it’s important to both recognize what you’re working with when you first start and put
the right pieces and players in place to change it as you go along.
Political
The P goes first in PESTEL for good reason. The political environment you are working in, both
at a local and at a larger geopolitical level, is an upstream factor that will influence the economic,
social, technological, environmental, and legal context in which you’re working.
Conflict states, transitional nations, and secure settings all have their different political
nuances. If you’re operating in a conflict state, the external threats posed by political factors may
include your physical safety, the physical safety of your end users and other stakeholders, the secu-
rity of your supply chain and thus your ability to procure and deliver goods and services; and the
composition of your end users (e.g., for a social venture targeting disadvantaged populations in a
conflict setting, it is easy to imagine a state of constant flux due to refugees and migrant popula-
tions). In a transitional nation (e.g., post-conflict), the physical safety of individuals and assets
may not be under threat, but the political will and administrative capacities required to regulate
logistics and the flow of information, goods, and services at the community or state level may be
weakened. Even in a politically stable situation, political factors may often be underlying the social
challenges you are dealing with. Housing inequities in metropolitan areas are a historical example.
Availability of resources to support social ventures providing services to HIV patients from mar-
ginalized populations is another.
Are there any positive influences or opportunities provided by the political setting in which
you’re operating? Are there any policies or political debates that could amplify the visibility of
your venture? An example of a social entrepreneur who seized upon an opportunity related to
a new government policy in the United States is the founder of Benestream, a start-up designed
around the new Affordable Care Act.* If you are working in a nation under transition, are there
any positive trends that you could leverage among the political turmoil? A wealth of social entre-
preneurs in Egypt created new social initiatives and community-driven organizations in the years
preceding, during, and after the Arab spring to mobilize resources for social development. Two of
the many examples are Hisham El Rouby, who saw youth as an emerging resource and founded
Etijah to build youth networks for volunteering and civic engagement,† and Mona Mowafi, who
saw the Egyptian diaspora as a resource to support local entrepreneurs and founded RISE Egypt
to mobilize the global community.‡ The RISE website shares a wealth of examples of social entre-
preneurs working to create new products, services, and systems in Egypt (www.riseegypt.org
/entrepreneurs).
Economic
Whether your social venture is a for-profit enterprise, a nonprofit organization, or an initiative
within an existing organization, it will most certainly be shaped by economic trends. You could
be addressing a market need and providing a market-based solution or addressing a gap where
* http://benestream.com/.
† http://etijah.org/about/.
‡ http://www.riseegypt.org/letter-from-the-president/.
the market is broken and may work against you. In both cases, it is essential to understand the
economic landscape around you, whether it will change over time and whether you may be able to
influence the market over time. Again, just like the political landscape, the economic factors you
are faced with will likely present both threats and opportunities.
The size of the market is a key factor. Are you operating in a setting where you are likely to
reach large volumes? Or are you operating in a setting with a limited economy and market size?
Scales of economies is just one factor; trend over time is another. You could be operating in a large
market that is on the decline or a small market that is on the rise.
Another important nuance is the relationship between economic factors and other factors in
your PESTEL analysis. The scale and direction of growth of the economy may change suddenly if
you are operating in a politically volatile situation. How will the economy you are operating in be
influenced by political changes? Political instability generally means economic instability, and it is
critical to factor that uncertainty and plan for sudden change.
Economic considerations might also influence your investors. The size, trends, and volatility
of the market you’re operating in will determine not only how you build and structure your ven-
ture but also how you finance it. Some social entrepreneurs are working to build policies to help
shape the economic and investment landscape in fragile markets, beyond providing their product
or service to their target audience. One of the many examples is Willy Foote, who we’ll meet in
Chapter 9, who founded Root Capital and helped build ANDE* to support small and growing
businesses that can help lift countries out of poverty.
Social
Cultures, religions, histories, heritages, and heterogeneity of your end users have already shaped
the design of your venture throughout your research, prototyping, and testing phases. As you roll
out your venture, how will these factors continue to shape it, and how will the introduction of your
new venture affect the social dynamics caused by these factors?
What social norms are tied to the challenges you are addressing, and how will your interven-
tion challenge these norms—what are the repercussions? Preparing for the social dynamics already
in existence and those that will be introduced by your venture goes beyond the basic procedures
such as meeting with stakeholders to ensure ownership and participation; it involves thinking
in a far-sighted way to build the social networks and support systems required to produce social
change.
Building women-led businesses is a great example of this. We’ve already heard from Libby
McDonald about challenging social norms and building new systems and value chains in the
waste sector in Chapter 3. These days, Libby is working on Prosperity Catalyst, a spin-off of the
social enterprise Prosperity Candle, building businesses with women in conflict settings.† In this
and other examples, you’re not only manufacturing and marketing the product or service itself,
you’re also challenging social norms that are still deeply rooted in many societies around the world
today. These not only affect the women leading the business but also have consequences on the
perceptions and behaviors of their customers, suppliers, everyone along the supply chain, and
other stakeholders.
As a first step, awareness and understanding of these social nuances help you integrate them
into your business plan, operations, marketing, and contingency plans. You have to survive in
* www.andeglobal.org, www.rootcapital.org.
† www.prosperitycatalyst.org.
this environment in order to work in it and change it. More importantly, it helps you shape your
organizational strategy and external partnerships and purposely plan your ripple effect.
Technological
Many social ventures work in low-resource settings, and technological external factors can be a
barrier. Poor Internet connectivity or speed, unreliable electricity, and high telecommunications
costs are some of the common barriers encountered by social entrepreneurs all over the world.
These are a risk because they can slow down operations and make it challenging to communicate
with end users and stakeholders. (Often, they are also related to social factors such as preference
for face-to-face communication, which can require more travel and can be time consuming and
expensive.)
At the same time, technological trends around the world can also be considered a positive
external influence and an opportunity to introduce new solutions, increase access to information,
and design and create mobile services and products. Examples are m-health interventions and
telemedicine, which bring access to healthcare to remote rural settings with few doctors. Online
education and online lending are also examples, as we saw with Kiva in the first chapter. New
technologies can either be developed explicitly as solutions to tackle social challenges, as we saw
with D-REV in Chapter 4, or incorporated into the implementation of other solutions to enhance
their efficiency and efficacy, as we saw in the HLC case study.
The way people interact with social challenges is changing every day due to new technological
developments such as increased access to mobile phones and the Internet. This will affect your cus-
tomers, your competition, your communications, and your ability to connect with collaborators.
What technological aspects are considered a challenge in the setting in which you are operating,
and what are some aspects you could leverage as a positive factor, or develop new ones? How can
you use existing technologies to optimize your social impact?
Environmental
How is the natural environment related to your social enterprise? If you are working in rural
settings, especially in the agriculture setting, there will be many external factors related to the
environment (soil, temperature, water, etc.) to account for. But even if you are working in a digi-
tal enterprise, chances are that one or more steps in your supply chain will in fact be influenced
by the environment. Natural resources such as fuel for transportation are one aspect—will
rising fuel prices affect your operations? Or will you leverage this external factor to introduce
renewable energy as part of your venture? What about social trends related to climate change—
are consumers making choices differently, in a way that will affect the number of people you are
able to reach and the way in which you reach them? Is your level of competitiveness compared
to other enterprises affected by changing commercial and corporate attitudes and initiatives
related to the environment? Keeping your pulse on these changes will help make sure you stay
ahead.
Even in a basic social enterprise, seasonal changes and patterns of behavior are important
environmental factors to consider. How are the movement, activity, and spending patterns of
your end users influenced by their physical environment? How does this influence demand?
On the supply side, transportation, storage of goods, and other logistical factors are all related
to external climate, weather patterns, and the physical infrastructure of the setting in which
you are operating as it relates to the natural environment. This is where you take the time to
chart out these changes and how they affect your operations, customers, suppliers, and other
stakeholders.
As with all external factors, it’s important to understand not only how environmental factors
may affect your venture, but also the effects your venture will have on the environment. Regardless
of your topic and sector, part of your impact on society will be your environmental footprint (the
natural resources you require and wastes or by-products you emit). This provides an opportunity
for you to quantify that footprint, and work with stakeholders across your value chain to under-
stand and optimize your total impact on the world, finding ways to maximize your net positive
effects in the social, economic, and environmental dimensions for sustainable development.
Legal
Familiarizing yourself with the legal requirements involved in setting up and running a new ven-
ture in the country you’re operating in is critical to do from the start. Safety protocols, quality
control requirements, and reporting and tax laws will differ not only by location but also by sector
within each location. The food sector, the health sector, the education sector…each line of work
has its own rules and regulations, and these vary within and across countries. So legal consider-
ations are important from the inside out!
Legal aspects are often the last step a social entrepreneur considers, and this can potentially
have devastating implications. Depending on where and how you register your venture, there will
likely be legal restrictions on what you are allowed to do and how you are required to manage your
finances. As we saw in Chapter 7, Nuru is an example of a social enterprise with multiple entities
registered in the United States, Kenya, and Ethiopia. The different legislation in each country
impacts whether the organization is even able to register as a social enterprise to start with, what
goods and services it is allowed to offer, how much tax and external auditing is required, and other
implications related to profit.
In many countries, a legal entity for social enterprises does not exist. In these cases, social ven-
tures are often required to select one of the traditional commercial or civil legal forms, even if it’s
not the best match for them. Being aware of these legal aspects can help you plan for the necessary
technical, legal, accounting, and other forms of support that alleviate the burden of navigating
government rules and regulations on your own, filing the right paperwork, etc. But more than
that, being aware of the legal environment will educate you on the behavior of your competitors
and other stakeholders, the advantages and disadvantages of different sectors (e.g., private vs.
civic), and the opportunities for you to benefit from legal structures that were made to protect you.
Beyond your own interactions with the law, it is important to understand how the legal
system operates in the countries you are working in—are you working in a setting where laws
are enforced, or are you working in a setting where government corruption, bribery, and lack
of transparency are common? There are various developing and transitional nations in which
the risks from these legal factors are too high for you to operate on your own in an efficient or
effective manner. Thus, your PESTEL analysis may lead you to make strategic decisions such
as partnering or working as part of an existing organization, whether it be an international or
established local organization.
Last but not least, are there any legal factors you aspire to change? Who are the stakeholders
working on, and affected by, the policies and regulations affecting your social challenge? Is it pos-
sible for you to incorporate a legal reform agenda into your planning, as we saw with Albina Ruiz
and Ciudad Saludable in chapter three?
Know Your Limitations

Other than assessing your external threats and opportunities, it’s also important to assess your
internal strengths and weaknesses. We’ve already talked about some of the internal strengths
of your social venture, such as the fact that it’s user driven, tried and tested, and based on mar-
ket research. Your team composition should also be built toward serving as a strength factor
for your success. But there are always inherent weaknesses. No product or service is perfect!
Thinking about your strong points and your natural limitations is important before you move
forward. This helps you play to your strengths and make the right partnerships to complement
your weaknesses.
Internal weaknesses could be technical, physical, knowledge based, or structural. Characterizing
them is key in determining the feasibility and viability of your business model and in making
accurate projections. No team is perfect, and no idea is bulletproof. Not knowing your own weak-
nesses is your number 1 risk! Some teams have a highly specialized degree of technical expertise
(e.g., coding, for a mobile app; clinical care, for a health intervention; curriculum development,
for an educational social enterprise, etc.) but less experience in financial management—this can be
fixed by hiring or contracting out the right person! Others may have excellent management skills
but incomplete information on measuring and maximizing social impact, understanding gender
implications, or analyzing geopolitical and sociocultural factors. This is totally okay! Identifying
your strong and weak points is just the first step in addressing them. You can hire or partner with
new team members or external partners with diverse skills, or partner with other organizations
specialized in the skills that are not your forte, thus turning these would-be weaknesses into
strengths.
In some cases, your weaknesses may not be in your team or personal skills but aspects of your
product or service itself. In developing your solution to meet the needs of your target population,
you may have had to make tradeoffs knowing that it can’t serve everyone, everywhere, at the same
time. In other cases, you may have had to sacrifice sophistication for affordability, flexibility for
durability, local context for scalability. This is part of the game. It helps you focus your attention
on your strong points, clarify your value proposition, and clarify your target audience. You can
also form strategic partnerships with other organizations or social entrepreneurs to build a supply
chain that offsets these weaknesses, for example, by offering a set or system of complementary
solutions.
Knowing your strengths and limitations is key to focusing your efforts, time, and resources
in the right places. No social venture can solve all the world’s problems. Sometimes, trying to
strengthen your limitations is not the best way to focus your efforts. Rather, focusing on your
strong points and recognizing your limitations may get you farther.
Tool: SWOT Table

Now that you’ve spent time with your team and stakeholders building your internal strengths,
recognizing your internal limitations, and analyzing your external opportunities and threats, let’s
put them all together and see how this will play out. We call this a SWOT analysis, and it’s basi-
cally a way of examining the complete landscape and assessing factors working for and against us.
We’ve already agreed that social entrepreneurs do not operate in a vacuum. The biggest weapon
you can arm yourself with is knowledge and consideration of the factors that might play out in
SWOT + –
Internal Strengths Weaknesses
External Opportunities Threats
Figure 8.2 SWOT.
your favor or work against you. The SWOT table (Figure 8.2) can help give you a complete picture
of the pluses and minuses of your business. What are the internal strengths, internal weaknesses,
external opportunities, and external threats that you are working with here? And how might they
interact with each other?

The business planning process began the moment you started studying the challenge you’re set-
ting out to tackle. Characterizing the challenge, co-creating with the community, and innovating
and designing the solution all laid the foundation for your value proposition, USP, and theory of
change. Developing your social impact metrics using the logframe or equivalent planning tool
allowed you to work backward from the change you’re targeting, to build the framework needed to
get there. In this chapter, you learned to add the costs, revenues, and timeline to this logical frame-
work and put together the different components of your vision into a viable business model. Most
importantly, you’ve incorporated your risk analysis, which will help you plan for and account for
your internal strengths and weaknesses versus external threats and opportunities.
Exercise: Building a Viable Venture

Before you move on to the next chapter, you owe yourself the following three deliverables:
1. Develop your pro-forma income statement, using the template in Figure 8.1, or any other
template of your choice. You should be able to answer the following in one sentence: How
much time will you need to break even and what are your start-up costs?
2. Present your PESTEL analysis. Use bullet points with less than 250 words per point.
3. Fill out your SWOT table using the template in Figure 8.2 or any other template of your
choice.
CHAPTER SUMMARY
◾◾ In this chapter, we analyze the financial viability of your venture. This is yet another
step in the iterative design process. If the numbers don’t add up, we go back tov the
drawing board and iterate until we find a way to make it work!
◾◾ To assess your financial viability before launching, a pro-forma income statement is
used to summarize all costs and revenues.
◾◾ Costs are estimated based on the information you have collected to date, such as the
resources listed in your business canvas and from Chapters 5 and 7.
◾◾ Revenues are estimated based on your market research from Chapter 5, including the
market size, customers’ willingness to pay, promotion, and competition analysis.
◾◾ Common business models in social entrepreneurship include profit generating mod-
els, where revenues from customers add up to exceed costs; and hybrid models, where
multiple revenue streams are required to subsidize the cost of service.
◾◾ Risk and uncertainty analysis is required to assess the internal and external factors that
might influence your venture’s viability. These are summarized using the PESTEL
and SWOT frameworks. Leveraging your strengths and external opportunities and
accounting for your weaknesses and external threats help maximize your chances of
success.
Company profile: BeneStream, www.benestream.com.

Founded in 2011, for-profit model based in New York City, United States.
Product/service: BeneStream’s signature product, Medicaid Migration™, helps companies
identify and enroll eligible employees in free health insurance through the Medicaid expan-
sion portion of the Affordable Care Act.
Goal: BeneStream is a mission-driven business whose goal is facilitating access to quality
healthcare for low-income workers while helping businesses manage healthcare costs.
How it works: BeneStream identifies and enrolls low-income workers in Medicaid using
a process called Medicaid Migration™. Medicaid Migration™ allows businesses to fulfill
the employer mandate portion of the ACA while reducing their healthcare costs by moving
eligible employees off of their health plans. BeneStream utilizes a proprietary screening plat-
form to identify Medicaid-eligible employees and enrolls the employees using phone based
and on-site professionals.
Company profile: Prosperity Catalyst, www.prosperitycandle.com; www.prosperitycata

lyst.org.
Founded in 2010, US-certified B Corporation (for-profit) and US 501c3 (nonprofit).
Product/service: Prosperity Catalyst incubates and launches women-led businesses in dis-
tressed regions all over the world by providing the tools, training, and a community to help
women thrive as skilled entrepreneurs and leaders.
Goal: Creating new opportunities for women in conflict areas, thus creating entrepreneurs
and leaders to be catalysts for social and economic change.
How it works: Prosperity Candle is a social enterprise that believes in supporting women’s
entrepreneurship. At Prosperity Candle, every candle produced is handmade by female
artisans. They began in the United States, and their partnership with Women for Women
International allowed them to test their idea in Iraq. Today, they also operate in Haiti. Every
candle purchased helps provide a living wage for those women, many of whom are poverty
stricken or refugees working to build a better life and future within the United States. The
sister organization, Prosperity Catalyst, provides the tools, training, and a community to
help women thrive as skilled entrepreneurs and leaders.
Chapter 9
Pitching and Networking
Getting the Support You Need to Make This Happen

Now that you’ve designed the different components of your social venture and tested them out,
you’ll need to present it to funders and other stakeholders who will provide you with the financial
and nonfinancial support needed.
There are so many resources at your disposal, and part of being a strategic social entrepreneur
is going out and mobilizing those resources!
In this chapter, we’ll make sure you go out there armed with the right tools and weapons you’ll
need. The first thing you’ll need to have in your hand is a business plan or executive summary out-
lining the key points of your business model, how and why it works. Then we’ll talk about some
ways to expand your network and surround yourself with the right people and resources to help
pave your path toward securing the funding you’ll need.
Why Do You Need a Business Plan?

We’ve all heard the famous saying, “People don’t plan to fail, they fail to plan.” At this stage, you’ve
failed on purpose while experimenting with different solutions in the design stage; now it’s time to
start succeeding on purpose! The point of a business plan is not to waste your time locking yourself
in to a minute-by-minute dictation of how you will spend your time for the next several years, as
many social entrepreneurs fear. First, the point is to provide a roadmap. It’s that simple—having
a map in your hand helps you see where you’re going and the different ways to get there. You can
still decide to go off-roading! It just helps you assess the dangers and opportunities ahead, and plan
for adequate supplies for your journey.
Second, it helps you garner support. If you want people to help you, you’ll need to show them
where you’re going with this. Most people don’t back an idea, they back a person; that person’s
vision, and that person’s ability to make that vision into a reality. You need to demonstrate that
you are a backable social entrepreneur with not only the passion and the vision, but also the know-
how to translate it into results.
At the end of the day, your business plan can and will change. You have to be responsive to the
data that emerges from the field as you implement your plans, and adapt to new evidence, not to
175
mention changing contexts. In fact, it’s that responsiveness and adaptability in the end that will
most likely determine your success. There are a lot of unknowns, as we explored in the last chapter.
You’ve done a lot of work to chart out this new territory, and writing your business plan is simply
a way to have a plan in your hand as you venture out. Think of your business plan as an adaptable,
living and breathing plan—you can, will, and must revisit it along your journey.
How to Write a Business Plan

Guess what? You’ve already written the key components of a business plan. The chapters in this
book so far have represented the journey you’ve taken to building an effective and viable solution,
and the business plan simply presents those ingredients of the solution. If you haven’t skipped the
homework section of each chapter, all you need to do at this stage is put it all together!
You start by presenting the challenge you’re facing, any key statistics that can help capture its
breadth and depth and some personal stories that capture the urgency and importance of tackling
this challenge.
Then you present your solution, describing how it builds on existing evidence, what others
have tried before and what they haven’t, how it was co-created with the community and developed
through user-driven design.
You present your mission, vision, values, and theory of change. Then you go about describing
how it will all work.
This includes describing your market research, preliminary results from your testing and pilot-
ing, and the dimensions of your social market strategy. Include summary information on the nuts
and bolts of your operations, including distribution channels and key resources.
This is followed by your financial projections, timeline and breakeven point, and plans for
growth. Last but not least, you present your strengths-weaknesses-opportunities-threats (SWOT)
analysis and describe your contingency plans to mitigate risk.
A business plan provides high-level information and summarizes it in an easy-to-understand
format. If you’d like to include details that you feel will alter the flow, it might be better to include
these as an appendix.
Highlight your strengths and convince the reader that you and your team are the right people
to make this happen! As with everything you do as a social entrepreneur, this is not something you
sit down and type up alone in your office overnight. This is a living, breathing document that is
co-created with your stakeholders over time and revisited as your venture grows.
Your businesses plan can come in many different sizes, shapes, and forms. It can be a docu-
ment, a slide deck, a long and detailed version, or a basic nuts-and-bolts version. Go with what
works for you as a start, and you can tailor it to different audiences as needed.
Right now, you’re aiming for a 10- to 20-page summary document, although some business
plans can be much longer. For a slide deck, you’re looking at 10 slides ideally; this needs to be
much more barebones than a narrative document.
Most entrepreneurs like to have both handy, because after pitching your slide deck to a poten-
tial supporter, you might be asked to then share your more detailed business plan document!
Executive Summary
Regardless of the length and format of your business plan (whether it’s in document format or
presented in a slide deck), you should be prepared with a one-page executive summary. This tells
Pitching and Networking ◾ 177
your reader just enough to know about the main concepts and components of your venture,
highlighting key takeaways from each component of the plan without going into too much detail.
You’ll see in the future that many times, when you tell people about your venture, they’ll ask to
see a one-pager on it. So have your executive summary ready!
Business Plan Outline

Before you go back leafing through the previous chapters of the book and digging up all your
homework assignments, let’s take a snapshot look at the main components we’re talking about
here. The outline shown below in this section presents the basic components of a business plan
as they should be presented. Each numbered point can ideally be captured in a written page, or
a slide if you’re going for a presentation format. The indented points are the details you need to
elaborate on if you’re writing a full business plan document, and you can also elaborate on if you
have more time to give a full presentation (we’ll talk more about presentation options below). Of
course, you can use more than one page or one slide for each point, if needed. Remember, techni-
cal details are best added as appendices to avoid disrupting the flow.
You don’t need to stick to the exact same order as the outline in the following, but make sure
your business plan tells a story and follows the logic you used in developing your solution. Have
you noticed how most website have different sections called “about us” or “who we are,” “what we
do” and “how it works”? These are the key pieces of information that people will want to see in your
business plan. Think about where it makes sense to put each piece and how it combines with other
pieces to convey your message. The only pointer we’ll provide here is that in any social business plan
it is advised to start with the challenge and the solution. The team can go sooner or later after that
as you see fit, but it’s not advised to put the team before the challenge and solution. Remember, this
is not about you, it’s about the challenge you’re tackling and how you’re going to change it!
Here is one way to do it:
1. Cover page: contact info, title, name of venture, logo, date of writing/presenting
2. The Challenge: What is the social/environmental challenge you are facing
(including key statistics on who is affected, where, how, root causes)
3. The Opportunity: Where is the opportunity you have identified for change
(including a description of your co-creation and testing process)
4. Your Solution: A description of your product or service
(including how it works, nuts and bolts, operations, distribution, customers and market)
5. Vision, Mission, theory of change, target audience
(a description of the components of your compass)
6. Team: Why you can make it work; skills, values, your story, how this came about
(key positions and who fills them, why you are the best people to make this happen)
7. Business Model: How is this viable
a. Main costs and revenues, financial projections, breakeven point
b. Scenario analysis, competition and market analysis, threats and opportunities
8. Impact: How does it affect people, what does it change, what are the long-term effects
a. Stakeholders and community ownership; potential partners and collaborators
b. Short- versus long-term goals; Milestones; phasing
c. Expansion plan: Where will you reach, how many people will you impact, how big will
you grow
d. How your team will evolve to meet the needs of a growing organization
e. Strengths of your model and your team that will allow you to reach your target; charac-
teristics of the market
9. How the audience can help: What do you want from them, where can they add value
a. Challenges you are facing: Obstacles, risks, limitations, how these are addressed
10. End with a reminder of the vision you have for the future, and the change you will make,
bringing it back full circle to the story you started within the first one to two points previously.
Presenting and Pitching Your Plan

You should be prepared to present your social venture in a variety of formats. A common slide
deck pitch can be 10–20 minutes when presenting to private investors. At conferences, speakers
are usually given about 15 minutes, with time for questions and answers (Q&A) afterward. If you
are speaking as part of a panel, you may be allotted 5 minutes or less, with a longer discussion
time. Many entrepreneurs find it helpful to have three versions prepared: the full slide deck (10–20
minutes), the abridged version (5 minutes or less), and the elevator pitch (less than 1 minute).
Your Slide Deck

Your full slide deck is something you can adapt to use in a versatile manner when presenting to
funders, peers in conferences, prospective clients, and other stakeholders. It is based on your busi-
ness plan and follows the same general order and outline. While the basic information inside the
slides will not change from audience to audience, your areas of focus and the ordering will. We’ve all
rearranged our CV to demonstrate a better fit to various job descriptions—the same goes for differ-
ent audiences. If you’re presenting to funders, you may need to spend more time going through the
financial details. If you’re presenting to community members whose collaboration you’re seeking,
you may need to spend more time going through your co-creation process, describing the feedback
you received from various community members, how it was incorporated into the final product, and
how you’re leveraging community assets at multiple points along your supply chain.
If time allows, it’s helpful to share preliminary results, trends, patterns, and even raw data with
your audience. If you’re tight on time, include these as appendix slides. What are the factors that
so far have affected the customer experience? How are you faring with respect to your competitors?
Your audience may have questions on these points, so it’s better to be prepared!
The Abridged Version

When you are given only 5 to 10 minutes to present, use an abridged version of your slide deck. What
challenge are you tackling? What is your solution? How does it work? Who are your clients, and how
are you reaching them? What is your business model? Where will you reach in terms of scale?
Again, you can include more detailed information in the appendix, for discussion and Q&A.
The goal of your presentation is simply for people to understand what you do, as a starting point
for discussion.
Less Is More
The fewer pieces of information you use, the more information will be conveyed and retained by
the audience. For example, you don’t want to include all the statistics you have gathered on your
social challenge. Include one photo, or one statistic, that demonstrates the urgency and need. Then
move on to your solution. There is a growing body of literature on the “less is more” approach to
presenting information, especially in a setting where time is limited.
Your full slide deck should be reserved for settings where people are coming prepared to settle
in for a while and focus, and are looking to acquire detail about your work. Outside of those set-
tings, your goal is not to share detail but to secure the attention of your audience. Keep the infor-
mation on your slides minimal, use a simple message or photo to convey your point, and focus on
making an emotional connection rather than presenting dry facts.
If you don’t have your elevator pitch prepared and practiced in advance, by the time the
doors open, you’ll still be fumbling for words.
Your Elevator Pitch

The elevator pitch does not involve a slide deck. This is how you present your organization verbally
to someone at a networking event, conference, reception, or other social encounter. The term
originates from the quite literal situation of bumping into someone in the elevator and having
mere seconds to tell them what you’ve been up to. You need to be prepared to deliver a speedy,
info-packed, answer to the question “So, what have you been up to?” And this does not mean talk-
ing fast. If you don’t have your elevator pitch prepared and practiced in advanced, by the time the
doors open, you’ll still be fumbling for words.
When preparing your elevator pitch, take yourself back to the most basic and literal sense
of the term. Imagine yourself in an elevator with someone, where you have literally seconds to
explain what you do and why it’s important. Can you answer this question in one sentence?
You can have a slightly longer elevator pitch of two to three sentences reserved for situations
where time—and the interest of the person(s) listening—allows for a fuller explanation. But, defi-
nitely, have your one sentence version ready to go. The shorter, the better! Think back to the advice
you got in Chapter 5 about stating your value proposition and writing your mission statement. The
shortest version of your elevator pitch can be just that.
Some social entrepreneurship conferences and contests have “lightning” rounds of pitches.
This means you have less than a minute (sometimes 30 seconds or less) to pitch your social ven-
ture to an audience or panel of judges. The term comes from the image of a bolt of lightning,
which delivers a big impact in seconds, boom pow! Try watching some lightning rounds online to
develop your take on what pitching might look like and feel like. Try out your own pitch to friends
and family and teammates before you attempt it on others!
Pitching Tips
Find Your Balance
Perfecting your pitch ahead of time is crucial for a smooth delivery, but there is a very fine line
between delivering a well-prepared pitch and sounding like a robot! While fumbling for the right
words will risk losing the attention of your listeners, so will a delivery that sounds like an auto-
matic voice recording. Sounding natural, passionate, and real is what will engage your audience.
Say it like you’re saying it for the first time!
Make a Connection
It’s not just the words you say and how you say them but also how you connect with the person
you’re speaking to. Maintaining eye contact, smiling, and positioning yourself so that you’re fac-
ing them and giving them your full attention will draw them in and help them give you their full
attention in return.
A common mistake is looking around the room at a networking event while you’re talking to
someone, to see who else you should be talking to. It’s hard for your listener not to notice this,
and it will make them much less interested in hearing what you have to say. Make them feel like
they’re the only person in the room!
Similarly, if you are standing in front of a room full of people presenting your work, make each
person feel as if she or he is engaged in a personal conversation with you. Look at them and hold eye
contact for a few seconds until moving on to the next face. Wait to see if something registers in their
face to show that they are actually listening. Find someone whose eyes look glazed over and look
straight at them while delivering a line until they focus back in on you. Pay attention to the signals
your audience is giving you. Are they smiling, nodding, and looking concerned about what you are
saying? These are all signs that they are really listening and that what you are doing is working. Are
they checking their watches or their phones or looking around the room at others? This means you
have lost them and need to switch gears fast. Ask a question, take a vote, show a picture, or tell a joke!
One of the best ways to make a connection, whether in a small-group conversation or while pre-
senting to an audience, is to research your audience ahead of time. What do you know about your
listener(s)? What do they do for a living, what do they care about, why are they here today? Presenting
your work from different angles will help draw in diverse audiences with different perspectives. For
example, focusing on the financial aspects or the people aspects first, focusing on the geographic regions
or the demographic populations first, or thinking about what will grab their attention and what they’ll
want to hear more about are different ways to present the same information using a different lens.
Get Them to Ask Questions

Another great way to keep your audience engaged is to share just the right amount of information
to spark their curiosity and have a nugget of information or two that you hold back for “round
two.” This is especially the case in informal settings, where you are not standing in front of an
audience who is expecting an entire presentation but rather are making conversation and network-
ing with one individual or a small handful of individuals. Here is an example:
◾◾ Scenario A
– Your listener: So, what do you do?
– You: I create medical devices to enhance maternal child health in low-resource settings.
There are x children around the world who die each year and y mothers who die in child-
birth. This can be solved with a simple device that does ABC. We work in geographic
regions 1, 2, and 3, have served xxx people so far, and plan to scale to yyy in five years.
In this scenario, you have probably bombarded your listener with too much information
right off the bat, by delivering your entire story in one go.
◾◾ Scenario B
– Your listener: So, what do you do?
– You: I create medical devices to enhance maternal child health in low-resource settings.
– Your listener: Oh, interesting…

– You: Yes, it’s extremely challenging work. There are x children around the world who die
each year and y mothers who die in childbirth. This can be solved with a simple device
that does ABC.
In this scenario, your listener is more likely to ask you a question to keep the conversation
going. She or he is probably extremely curious by now to find out more!
Know When to Ask Questions

It may be counterintuitive, but often, the best way to get someone curious about your work is to
ask them about themselves. People love talking about themselves, and a great way to create a posi-
tive first impression is to show someone you are interested in them. Listening to their story will
prep them for listening to yours. Plus, it helps you get that research out of the way, of knowing
your audience before pitching to them! You can strategically find a way to segue back to your work
by asking them about successes or challenges in their work and find commonalities you can talk
about. Starting your presentation at a stage where the listeners already know they have something
in common with you automatically makes them more interested in learning about what you do.
Common Mistakes to Avoid

Most of us have spent enough time listening to others present, to know the most common mis-
takes to avoid!
◾◾ Don’t look at the ground → Do look directly at your audience.

◾◾ Don’t fiddle with your hands → Do place them by your side to avoid distraction.
Use them strategically when emphasizing a point.
◾◾ Don’t shift your weight → Do stand strong with equal weight on each foot.
◾◾ Don’t talk too fast → Do maintain a consistent pace of delivery, while livening it up with
intonations, surprises, and catchy pieces of information.
◾◾ Don’t make it sound like you have all the answers → Do sell your ideas while showing that
you’ve thought out the risks and challenges and how to mitigate and address them.
◾◾ Don’t stress out! → Do enjoy yourself, because you’re the one who will set the tone for the
mood in the room, and you want others to enjoy listening to you!
A good way to catch some of the habits you might have while speaking in public is to record
yourself and play it back multiple times. The first time you view the playback, listen to yourself
carefully and try to catch any habits you can improve on, such as speaking too softly or too quickly
or saying things like “um” and “like.” The second time you view the playback, watch your body
language and try to catch any habits you can improve on, such as distracting movements, looking
at the floor, or poor posture. The third time you view the playback, watch it in fast forward! This
will make even the smallest of gestures and body languages painfully obvious and will help you
correct them. Next, practice your new habits and take a second video recording to see how you’ve
improved and how you can do better! Try new postures that convey confidence and authority—it
turns out your body language doesn’t only influence your audience, it also influences YOU!*
* Watch this TED talk or read the interactive transcript:

http://www.ted.com/talks/amy_cuddy_your_body_ language _ shapes_who_you_are.
Advice for Introverts

Many of the most creative minds are introverts, who prefer to spend more time thinking quietly
to themselves rather than talking to others. If you are an introvert, do not be intimidated by the
concepts in this chapter. It is possible to enjoy yourself while pitching and networking! Focus on
the ideas and on your work and how much you believe in it. It’s not about you, nor the person
you’re talking to. It’s about the mission.
Communication skills are something that you can learn, even if it doesn’t feel like they come
naturally to you. If you feel energized after working a room, then great! If you don’t, that’s totally
okay! Knowing yourself, building in the time that you need on your own before and after social
and professional engagements, and sharing the responsibility with your teammates will help make
it a more rewarding experience for you. But don’t shy away from it. Each and every person can
play to their strengths when conveying their ideas to others—whether you are gregarious, quiet,
talkative, thoughtful, charismatic, shy, or a different combination of these at different points in
time. Don’t try to be something you’re not, and at the same time, don’t give up until you find the
communication style that feels right to you. And you can, if you just keep trying!
Don’t be afraid to sell it.
You Can Be Humble and Promote Your Work at the Same Time
Most social entrepreneurs have a strong sense of humility because the work itself is humbling.
When presenting your work, your humility will come through, and that is a good thing. Your
audience will respect you for it. Just make sure that being humble about yourself doesn’t mean
understating your work, your ideas, and the importance of your mission. Promoting them is not
the same as promoting yourself personally. And remember, you are the person who developed this
mission, this vision, this product or service, and its value proposition. As much as you believe in
your work, believe in yourself. Humility is an important quality in a social entrepreneur. But that
doesn’t prevent you from showing pride in your work. Don’t be afraid to sell it.
Your greatest resource is your network.
Building Your Network

In the next chapter, we’ll focus on funding, but before we talk about money, let’s talk about your
greatest resource. Your greatest resource is your network. Start with your current network and
build outward. Many social entrepreneurs we’ve met throughout the course of this book have
said as one of their top pieces of advice during their public speaking: use your network. Your
network starts with the people you already know (peers, professors, parents, etc.) and the people
they know.
Attending conferences and events is a great way to build your network. Be prepared with your
elevator pitch, but don’t attack people with it! Allow the conversation to naturally progress to the
“So, what do you do?” question. Another great way to build your network is by conducting infor-
mational interviews. It may sound surprising to you, but many people will actually reply if you
e-mail them to request an informational interview. People like talking about themselves, and if
you make it clear why they should talk to you, you might just get a response. Try the tips in Tip
Box 9.1 to help increase your chances of getting a response.
Once you’ve scheduled an informational interview, make sure you are well prepared to use
your time wisely (Tip Box 9.2). Informational interviews usually take place over the phone or
online conferencing, rather than in person; but if you’re in the same city as the person you’re
meeting with, offer to come to their office for a short time slot. Suggest 15 minutes so that
they will know you are aware of their busy schedule and don’t want to take up too much of
their time. In person meetings are by far more effective, and help establish a stronger personal
connection.
Have your questions prepared, and keep them limited. No one wants to feel overwhelmed
with too many questions, especially within a short period. In order to make the most use out of
your limited time, make sure you’ve done all your research before coming to the meeting. Look
up these persons online, read any articles they’ve posted or videos/speeches they’ve made. Make
sure you’re familiar with their personal background, their work history, and their organization.
This will allow you to avoid asking redundant questions, and create an actual connection with
these persons.
That said, while your goal is to make the most of your time, the last thing you want to do is
rush through. Try to create a dialogue, rather than a Q&A. Save space for unexpected directions
in the conversation and also give them space to ask you questions. A good way to keep a conversa-
tion structured is by starting out with your goals (what you want to accomplish, both in your own
work and in this meeting) and looping back to them at the end. This will also help you organize
your own thoughts! This skill will also come in handy when you start having one-on-one meetings
with potential funders. Last but not least, make sure to ask for any recommendations they may
have on other people you should talk to or actions you should take. Send them an e-mail within
24 hours thanking them and following up on their recommendations, and keep track of all your
meetings so that you can build on each link in your network, one at a time.
TIP BOX 9.1 HOW TO GET AN INFORMATIONAL INTERVIEW

1. If you have a university e-mail, use it, rather than your personal or work e-mail.
2. As your subject line, write “Request for Informational Interview.”
3. Keep your e-mail short. You don’t need more than three sentences:
a. Who you are and what you do
b. Why you want to talk to that person (explain why you’re interested in their work
and what you want to learn from them)
c. End with a simple and direct sentence such as “If your schedule allows, I would be
grateful for 20 minutes of your time.”
TIP BOX 9.2 WHAT TO DO ONCE YOU GET THE INTERVIEW

1. Have your questions prepared and keep them limited.
2. Make sure you’ve done your research.
3. Don’t rush through. Keep space open in the conversation for unexpected dialogue.
4. Start by explaining what you hope to achieve (both with your work and with this
meeting) and circle back to those goals at the end of the meeting.
5. Ask whether they have any recommendations for other people you should talk to.
6. Send a follow-up thank you e-mail within 24 hours.
Keep track of your informational interviews and any action items.
Other than informational interviews, networking opportunities come in many shapes or

forms. Your career or classroom is the biggest networking opportunity. Chances are, whether
you’re a midcareer professional or a college student, the people in the room with you today are
people you will cross paths with in the future—and have the opportunity to build things with
starting now. Social events, professional events, conferences, and other networking events are
abundant in your community no matter where you live. Go to where the knowledge is!
In the following sections, you will find some more tips on where you can find like-minded
people and how you can expand your network to include potential funders, teammates, and other
supporters. But before you foray into these networking opportunities, keep in mind the basic do’s
and don’ts of networking (Tip Box 9.3). While it is important to “seize the day,” you don’t want to
sabotage yourself by making someone feel you are out to “seize” them! Recognizing the moment
is a soft skill that each entrepreneur needs to fine tune over time. Easier skills to get right from
the first try are the following: look people in the eye, smile, relax, and have fun! People will enjoy
talking to you if they feel you are enjoying talking to them! Make sure you are well polished (prac-
ticing personal hygiene is a basic skill that cannot be overlooked!), have a nametag where possible
and wear it on the right-hand side to meet the other person’s eye when they reach out to shake your
hand; and have a firm hand-shake but don’t be too aggressive. There’s a fine line between being a
go-getter and making someone feel that you’re out to get them!
TIP BOX 9.3 CARPE DIEM, NOT CARPE CORPUS!*

1. Remember your presentation skills: look people in the eye, smile, relax, and have fun!
2. Practice personal hygiene: you want to give the appearance of someone who is on
top of things. Wear well-laundered, well-pressed clothes and definitely do not skip a
shower or forget to brush your hair (or your teeth)!
3. Have a nametag where possible, and wear it high on the right side, since people read
from left to right (and your right is their left).
Have a firm handshake, but don’t be too aggressive!
* Carpe diem means “seize the day” in Latin. This is just a reminder that you can seize the day without
making someone feel that you are out to seize them! (Corpus means “body” in Latin J.)
So You’ve Got Your Business Plan … Now What?

Surround Yourself with Supporters
Before you seek funding, make sure you’re surrounded by the nonfinancial support that you need.
Your internal team should be composed of people who are in it for the long haul, just like you. Of
course, once you secure funds, you will be able to hire others. But your cofounders and founding
team are those who have skin in the game and are willing to take risks with you, sweat with you,
and pull all-nighters with you, if needed. Asking people to put their name on a start-up means that
you are asking them to have a vested interest. This applies not only to your internal teammates but
also to those who you assemble around you for guidance and mentorship.
Assemble Your Advisory Board

One of the best ways to make sure you’re getting the guidance you need and to start expanding
your network of contacts is to ask mentors to serve on your advisory board. The advisory board is
a group of people with a level of expertise in one of the areas that you need, who believe in your
venture and are willing to invest their time and knowledge—and affiliate their names—with you.
This is different from your board of directors or trustees, which we’ll discuss in a later chapter.
The advisory board has no legal or financial commitments to you but is just there to support and
guide you.
Building a relationship with potential advisory board members is a process that best occurs
organically; that is, these should be people whose help you genuinely need and whose interests
match yours. Think about it as looking for people who, when you reach out to seek their help, will
be impressed with and inspired by what you are working on. Building this relationship is a process
that occurs naturally and gradually over time, so that by the time you formally invite them to serve
on the advisory board, they already feel that they have been playing that advisory role.
When thinking strategically ahead about who it makes sense to reach out to, think about the
different areas of knowledge, experience, and types of networks that you need. Most likely, you
will need people with a mix of experience in entrepreneurship (those who have started their own
ventures) and in the subject matter you are working on (whether it’s health, education, environ-
ment, etc.). It is also strongly recommended to have general management advisors, whether those
with experience in nonprofits if your business model is nonprofit or for-profit if your business
model is for-profit. There are also people who are general networkers and have a huge pool of
contacts that they can help you spread awareness about your venture to. These are the connectors
we referred to in Chapter 3, those naturally gifted “people persons” who tend to make links with
others and nurture those links over time.
If you start with a handful of core supporters to help you build your venture from the ground
up, that core will grow as your accomplishments grow and as you are able to validate yourself as
an organization or initiative. Pool your contacts with your other founding team members and see
who they suggest. If you’ve identified a pool of individuals whom you think would be valuable
resource people to you, do some background research before reaching out to them. You only get
one chance to introduce yourself or be introduced by a common contact, so don’t play that card
until you’re ready. Go to a seminar, fundraising event, or other social networking opportunity
that you know that person will be attending. E-mail them in advance to let them know that you’re
interested in speaking and will be approaching them at the event. Find out whether you have any
common acquaintances that might be able to introduce you.
While you shouldn’t hesitate to try reaching out to new people, it’s often advised to start closer
to home. Who are you already surrounded by that can support you? Tap into your existing core
network, whether peers at your learning institute, colleagues at work, professors and their con-
tacts, or parents and their contacts. Think across generations in terms of not only your network
from school and work but also the network of those you know who are a generation or two above
you. These people are likely far more advanced in their careers than you are, have a larger pool of
contacts, have more knowledge and experience, and probably even more time to share. More often
than not, they will respond positively to the opportunity to help the younger generation (even if
you don’t consider yourself young!) in making changes for the future.
Start Fundraising!
Raising funds has to start at the very beginning. Before you can approach institutional investors,
donors, or funds (more on these in the next chapter), you need to find a way to demonstrate your
proof of concept, and this costs money! Different ways to start include the following:
1. Crowdfunding
A popular choice at the early stages is crowdfunding, a process where you appeal to the masses
to support you. If a large number of people donate small amounts, you can fund your proof-of-
concept stage. Crowdfunding is not limited to small amounts, you can also get larger donations
though a crowdfunding campaign, and you can appeal to people either online or offline. Some
web pages have compiled information on leading crowdfunding websites around the world.*
2. Fundraising events
Offline, holding events is one way to crowd fund. Events can help people get involved for
the long-term, by building awareness and creating personal connections. Finding company
sponsors in your community is one way to increase the amount of funds you can raise,
whether by matching the amount of donations made, offering food or beverages, providing
the venue, or other forms of support. People can either donate at the event, or you can pro-
vide the information and start building relationships which will develop over time to result
in financial support for your future organization.
3. University-based opportunities
If you are based in a university or other educational institution, you may have access to
research funds, student grants, fellowships, scholarships, or awards. Most universities have
various offices for student affairs, student services, community service, and related themes;
many also have offices or centers for entrepreneurship and innovation. There are people
whose job it is to help you identify resources—Use them!
4. Contests
Social entrepreneurship contests are held both at universities and by other hosts, includ-
ing foundations or corporate sponsors. Examples of these include the Hult prize, Dell com-
petition, Shell competition, Microsoft contest, and various university-based social enterprise
conferences and contests around the world. Find these, and apply! A few helpful links are
* http://www.crowdfunding.com/, http://marketingmoxie.biz/the-big-list-of-crowdfunding-sites/, http://www.inc

.com/magazine/201306/eric-markowitz/how-to-choose-a-crowdfunder.html, http://crowdsourcingweek.com/top
-15-crowdfunding-platforms-in-europe/, http://www.goodnet.org/articles/353.
listed here to help get you started.*,† Some universities hold campus-wide competitions, but
most open their competitions to social entrepreneurs worldwide. Contests are also often part
of most social entrepreneurship conferences, which we’ll read more about further in this
chapter.
5. One-on-one meetings
Meeting with potential funders might include philanthropists or investors looking for a
mix of social and/or financial return. Either way, it’s someone who believes in your vision
and in your capacity to make it happen. Some fundraising experts say that when meeting
with a potential funder, you should never ask for money at the first meeting. This may sound
counterintuitive, but if you think about it, it makes sense. You want to focus your energy on
selling your vision to them. Once they are sold, they will be asking you, how can I help, how
can I get involved? Learning this is mastering one of the greatest characteristics of a leader,
to make people want to follow you.
Tips for one-on-one meetings are similar to general networking tips (Tip Boxes 9.1 through
9.3), but a one-on-one meeting with a potential funder is more focused and personal. You are
basically pitching your social venture to them. You need to keep in mind that a social investor is
someone who wants to change the world: they have a mission of their own. Your goal in the first
meeting (or before you meet them if possible) should be to find out what their mission is. Then,
you focus your first meeting on making them see that your missions are aligned. (If they’re not,
then this investor is not the right match for you.) Ask for their advice, make them feel engaged,
and invite them to come join you on a site visit to meet your team and your end users.
A key nuance can be that the way to end a first meeting may differ between philanthropists
and for-profit investors. In philanthropy, it often takes multiple meetings over a long period to
cultivate a relationship that leads to a large donation. Impact investors and other for-profit social
investors, on the other hand, may be accustomed to a more aggressive approach and will likely be
looking for an “ask” at the end.
What Is an “Ask”?
When you pitch your project, your goal is for your audience to be asking by the end of your
pitch, “How can I help? How can I get involved?” They will be expecting you to provide them
with an “ask.” This means that you need to end your pitch with information on what they can
do. Depending on your audience, you may want to provide a combination of nonfinancial and/or
financial resources. For example, various asks could include the following:
◾◾ Follow us on social media and tell your friends

◾◾ Volunteer your skills and expertise
◾◾ Sign up for a monthly or annual donation
* http://www.ventureacademy.mckinsey.com/competition, http://socialventurechallenge.asia/about/, http://

www.genesis-generation.org/, http://enactus.org/, https://entrepreneurship.duke.edu/social-entrepreneurship
/clubs-competitions-conferences/, http://socialimpact.umich.edu/programs-activities/social-entrepreneurship
-competitions/, http://grasshopper.com/blog/startup-competition-guide/.
† http://www.ilo.org/wcmsp5/groups/public/---africa/---ro-addis_ababa/---ilo-pretoria/documents/instructional
material/wcms_222474.pdf (p. 5).

Or, you could end with an ask targeting an investor or group of investors, that says something like:
◾◾ We have an idea that could change the world. To develop our proof of concept, we need $Y.
With your help, in the next six months, we aim to: A, B, C.
(Or for a more advanced venture):
◾◾ In the past three years, we have demonstrated proof of concept, showing that our product or
service does A, B, C. In the next five years, we are looking to reach X people with our solu-
tion. We are raising $Y to fund this expansion (having already shown them information on
your costs, revenues, and business model). With your help, we can achieve ______
(fill in the blank, inserting your social outcome or objective).
These are just examples of what various asks could look like. The important thing is that by
now, you have carefully thought of and planned out what you are going to do and what your needs
are to get there. Run your pitch and your ask by friends, families, advisors, and supporters. Tailor
it for each audience, and then … Go for it!
Interview Box. Willy Foote, Founder and CEO, Root Capital
TC: Willy, you’ve navigated a whole set of diverse resources, includ-

ing both financial and human capital. What advice do you have
for social entrepreneurs just getting started?
WF: I’m a firm believer that to do this work, you’ve got to dive in. You
can’t decode everything up front, so you need a license from all
your stakeholders—including investors—to adapt and iterate.
TC: What was the turning point for you, when it all came together?
WF: For me, it was spending time in Mexico, the “barefoot empiri-
cism.” Hearing complaints from people, what they struggled
with. I had to search for my slip stream, the guiding path that would allow me to
leverage resources to tackle something as big as a market failure. For me, the slip
stream was three things. The first was I realized we have to shorten agricultural value
chains, remove the middlemen. The second guide path was people who carved our
way—first there was banking for the poor, and now, agriculture is next. The third
factor that helped it all come together was the shift of focus to agriculture among
policymakers. These are the enabling conditions and slip stream that allowed Root
Capital to innovate.
TC: How did you navigate all these players, from the farmers and cooperatives, to the big
businesses in the coffee industry, to the governments and multilaterals?
WF: Root Capital and our clients are part of a much broader ecosystem made up of
private, public and non-profit organizations—each with different motivations, per-
spectives and approaches. Reconciling these competing interests is not always easy,
but to achieve transformative impact, it’s essential that everyone is at the table. In
general, we are pathologically collaborative in almost everything we do: forming
networks with peers and practitioners, or joining existing ones, to push ourselves and
the social enterprise sector further. For instance, Root Capital is a founding member
of the Aspen Network of Development Entrepreneurs (ANDE), a group of over 100
organizations working together to find common approaches to measure impact, for
example. We’ve also been working with our competitors to form an industry associa-
tion called the Council on Smallholder Agricultural Finance; recognizing that Root
Capital meets less than one percent of the total demand for finance among small-
holder farmers, we’re speaking with a collective voice to expand the supply of capital
to rural farming businesses. As an organization, we have to stay relentlessly focused
on our core competency and always put our clients front and center. At the same
time, solving market failures this deep require many hands, and as long as we’re all
facing the same sector-wide challenges, it’s pointless to stand in separate corners of
the room.
TC: Can you give us an example of how you mobilized different networks and resources?
WF: A recent example was Root Capital’s response to the outbreak of coffee leaf rust,
a fungal disease that has reached epidemic proportions throughout Latin America
over the past three years. This created an emergency situation in multiple countries
where millions of dollars and thousands of jobs were lost. To respond, Root Capital
mobilized several of our partners to launch the Coffee Farmer Resilience Initiative—a
platform from which individual actors could pursue their own commercial or non-
commercial interests, while also supporting the “public good” activities that had long
been neglected by others. In this case, private sector partners made philanthropic
donations and direct investments to ensure a stable supply of high-quality cof-
fee and to support farmers throughout the region. Meanwhile, the U.S. Agency for
International Development matched some of this private sector capital and offered a
partial credit guarantee, and the Inter-American Development Bank provided grant
funding to support training and capacity building. Then, Root Capital served as the
lender: we designed and deployed long-term loans so that coffee farmers can replace
disease-affected trees with newer varieties, and we offered intensive training on finan-
cial management and income diversification. It’s an example of how to collaborate
across sectors and blend capital to achieve a common goal: more stability and resil-
ience for all actors within a particular supply chain.
TC: This was an emergency situation—how do you build on it for sustainable development?
WF: Yes, this was an emergency situation, but the writing was on the wall for decades. Leaf
rust revealed the effects of decades of under investment in agriculture, and it’s the prover-
bial “canary in the coal mine” signaling the impact that climate change will likely have
on agriculture and, in turn, on the livelihoods of smallholder farmers. In that sense, the
outbreak is a symptom of a much larger, chronic problem—one that is rooted in the same
market failure I witnessed in Mexico fifteen years ago. To achieve long-term sustainable
development, you have to work in partnership with others. You have to work across sectors
and across borders in what are often messy and uncomfortable partnerships. This is what
I like to call pathological collaboration.
Photo from www.rootcapital.org.

Finding Your Tribe

Being an entrepreneur can be lonely. While you may be surrounded by people most of the time,
and while you’re co-creating and recruiting supporters and team members, there are also days
when you might wake up thinking “this is impossible” and nights when you go to bed with your
heart thumping and your mind racing at the sheer burden of everything you have taken on. Social
entrepreneurship can be overwhelming! It’s not easy, and never at any point in time will you feel
that you have all the answers. Knowing that this is normal and that others are in the same boat can
help. While your main team is those immediately around you working on your venture with you,
community members and other stakeholders vested in this alongside you, you might find comfort
in realizing that your “tribe” is much bigger than that. Your tribe includes all the social entrepre-
neurs out there, working just as hard as you are to make a difference—finding them will empower
you and strengthen you by putting you in your element where you can get things done best.*
That’s on the soft side—on the technical side, there are also a wealth of tips, knowledge, exper-
tise, experience and tools that you can exchange with others. This can range from bouncing ideas
off someone, going to a seminar with a more seasoned entrepreneur, attending training workshops,
or accessing mentorship, consulting, and advisory resources. You can learn about tried and tested
methods, cases, and where to access certain needs, such as outsourcing—and you might even get
discounts on these services by joining certain networks. Below we will review some of these net-
works and resources, which can be as valuable to you as the funding itself.
Mentors and Coaches

Finding your tribe does not just mean finding your peers. People who have been in the same situa-
tion that you are in right now and have gotten past it to succeed and move beyond the struggle you
are facing today can be a huge source of support and guidance. A mentor is someone you develop
a long-term relationship with, who can offer you advice and often connections, and who simply
cares to see you succeed. Mentorship is one of the most valuable resources you can access, even
before you try to access funding.
Finding a mentor sometimes comes naturally in a university or workplace setting. Other times,
you have the opportunity to sign up for a mentor through formal channels. If you are taking a course
in social entrepreneurship, then chances are your university offers resources to support students start-
ing their own social ventures. Your mentor can be a professor, an alumnus, or a volunteer in a special-
ized network. Mentorship networks are often associated with universities, investor groups, events,
coworking spaces, incubators and accelerators, and other training programs. However, you don’t need
to restrict yourself to social entrepreneurship mentorship networks to find the right match for you.
Coaches are similar to mentors but play a more short-term role focused on building a specific
competency. Coaches are often provided to help you work on specific tasks if you enter a competi-
tion or join one of the various different kinds of entrepreneurship spaces described below. You can
also hire a coach if there are specific skill sets you need to work on.
Coworking Spaces
Many entrepreneurs work from home, coffee shops, libraries, or other places where they can save
on rent and keep their operations lean. Others use shared offices or find a corporate sponsor or
* A great reference on this notion is the book The Element: How Finding Your Passion Changes Everything by
Sir Ken Robinson, Chapter 5.
other organization to donate space. Yet another option you might want to familiarize yourself with
is the coworking space. This is different from a shared office because, in most cases, a coworking
space is set up with the specific purpose in mind to support entrepreneurs and their start-ups, pro-
vide utilities and facilities at low costs, and provide other services that members can benefit from.
Joining a coworking space can enhance your visibility and offer you access to a network of other
entrepreneurs and potentially investors. Many coworking spaces are also affiliated with incubators
and accelerators, which we will learn more about below. Most are often designed with a vision of
providing a space that fosters creativity and inspiration. Joining a coworking space is a low-cost,
high-yield way of accessing tools and services that foster innovation, while avoiding the isolation
that can come from being an entrepreneur.
Incubators
Incubators are spaces where entrepreneurs can grow their ideas into reality. Usually, this entails a
physical space to be shared by start-ups. Most incubators provide a package including one or more
of space, supplies, technical support, mentorship, and funding. Each entrepreneur enters and exits
the incubator at their own pace, creating an environment full of innovation at its various stages!
For most incubators, you will have to apply and be accepted. Well-known incubators exist all
over the world, representing various sectors. Most incubators include mentorship plus funding in
return for equity (a share in your venture; we’ll talk more about this in the next chapter).
A few examples of social entrepreneurship incubators from around the world are the Halycon
Incubator in Washington, DC, Enviu in the Netherlands, Social Incubator Fund in the United
Kingdom, Social Impact Lab in Germany, PACT in Singapore, and many others.*
Accelerators
Accelerators, on the other hand, are more like a class you are in, in the sense that they usually have
a predefined period in which everyone enters and exits the program and a more narrow set of selec-
tion criteria. While incubators may host a wide range of start-ups at various stages, accelerators
usually have a predefined program that requires that most participants fit within stringent criteria.
The goal of an accelerator is to rapidly grow an existing start-up, rather than gradually nurturing
it over time as an incubator does. Accelerators often offer investment capital or at least provide
the social entrepreneur with access to investors through networking, pitching, and showcasing
opportunities.
Some programs offer a variety of choices across the spectrum ranging from accelerator pro-
grams, “excubator programs” (nonresident incubation), mentorship programs, and boot camps.
Examples are the Global Social Benefit Institute (www.scu-social-entrepreneurship.org/gsbi), the
Global Development Incubator (www.globaldevincubator.org), and the Unreasonable Institute
(www.unreasonableinstitute.org). Many incubators and accelerators also spun out of universities
around the world, and chances are, you’ll have the opportunity to participate in one in your uni-
versity! An early-stage example is SEED in Cambodia (monashseed.org/incubator-program), and
a more advanced example is the Agora Partnership, initially established in Nicaragua and now
operating throughout Latin America (agorapartnerships.org/accelerator).
* Read this fun article about incubators in India: http://social.yourstory.com/2013/09/social-business-incubators

-helping-startups/.
Boot Camps
Boot camps are often also provided by accelerators but aren’t necessarily always tied to one. They
are short, intense training programs that help entrepreneurs develop their ideas and prototypes.
Social entrepreneurship boot camps are available at many universities around the world and
through other networks. An example from Asia is the DUS-HUB social entrepreneurship boot
camp (http://www.venturesforchange.com/). Social entrepreneurs can also attend general boot
camps not specialized in social purpose organizations; these can still provide the creative, rapid-
fire environment that you are looking for!
Other Networks
Other organizations and networks are available around the world to contribute to the social entre-
preneurship ecosystem by building networks that bring people together. An example from Europe
is the Start Up Europe Club (http://startupeuropeclub.eu). Alumni networks specialized in entre-
preneurship are also common in various universities. Angel networks and other investor networks
will also be an important potential resource for you—more on these in the next chapter.
Fellowships
Fellowships combine several of the services described by the various previous resources: they
gather a cohort of social entrepreneurs, offer them mentorship and in most cases funding, help
accelerate and scale their impact, and help them incubate new ideas. Fellowships are most often
for slightly more advanced rather than early stage ideas, which have already been tested and dem-
onstrated impact. Leading fellowship programs are listed in Chapter 1, Box 1.1. Most of the listed
institutions, which were formed to support social entrepreneurs, are best known for their fellow-
ship programs, which often form the cornerstone of their work. But don’t stop there—universities
and governments also offer fellowship programs, so make sure to check for fellowships near you!
Events
Entrepreneurship events and conferences are a great place to find mentors, investors, and potential
team members. They don’t need to be specialized in social entrepreneurship; there are often social
impact topics at general entrepreneurship events, and even if there aren’t, you are still likely to find
like-minded people looking to change the world.
University-based conferences can be found in most parts of the world and are easy to identify
using a quick online search. A good place to start is by seeing if there is a social entrepreneurship
interest group at your university or workplace. If there isn’t, you might just be the best person to
start one! Non-university-based conferences are also plentiful, such as the annual Social Enterprise
World Forum, Global Social Business Summit, Clinton Global Initiative, Social Capital Markets,
Poptech, Net Impact, and many others. Most of the institutions listed in Box 1.1 also hold annual
events and conference, so make sure to check those out.
Events other than conferences can also be found in most major cities, and even in the most
unexpected places around the world. You will find business planning seminars in a coworking
space in Beirut,* pitch contests in a coffee shop in Beijing,† and real-time prototyping events in
* http://www.lebtivity.com/event/kick-start-your-business-plan.
† http://www.1776.vc/insights/how-china-could-take-over-the-startup-world-2/.
Bihar.* Global Entrepreneurship Week† takes place each year in over 140 countries around the
world and is a good place to find many of the innovation and entrepreneurship players in your
geographic region. Even if you are not able to get there in person, check the website of the event
nearest you and read about the various organizers, speakers, participants, and partner organi-
zations. You may want to reach out to some of these on your own, no event needed. Conduct
an informational interview, find out about their application process, and create a dashboard for
yourself to determine the best timing to take this further (see resource dashboard in next chapter).
A Word of Caution
You’ll notice as you start to build momentum how easy it is to get carried away with the social entre-
preneurship scene. There is a lot of hype around social entrepreneurship these days! While it can be
extremely helpful on many levels, for both moral and technical support, it’s also easy to lose touch with
the reality of your end users and the world they live in, which is a very different scene. Stay connected to
the community you co-created with; make sure your mental bandwidth, energy, and thoughts are with
them, not with the hype around you. Whatever you do, stay focused on your mission and your work.
Remember what we talked about at the very beginning of this book: if you want to succeed, you can’t
make it about you. What you want to be celebrating and shouting out loud about is not you and your
ideas; it’s your work and the tangible progress you make toward the social impact you set out to achieve.

In this chapter, we’ve created a vehicle for you to present your work to the world by putting it all
down into a business plan. With your business plan in hand, you can hit the pavement and start
rallying support from potential funders, advisors, and other players in the social entrepreneurship
ecosystem. Building your network, building your advisory board, and finding out what resources
are available for social entrepreneurs in your area will lay the foundations for you to start talking
to funders. But most importantly, it will help surround your social venture with supporters who
can help you influence the outcome. In the next chapter, we’ll talk about the different sources and
types of funding and different social investment approaches that various funders take.
Exercise: Putting It Down on Paper

All right, it’s time to put it all down on paper!
1. Using the outline provided at the start of the chapter, prepare a 10- to 20-page document present-
ing your social venture and how it works. Remember, you have already drafted most of the mate-
rial, you just need to pull together and organize your assignments from the previous chapters!
2. Using a similar outline, prepare a 10-slide pitch deck to present your venture to potential
supporters. Try your best to stick to 10 slides as much as possible or as close as you can get it.
Remember, you can include preliminary data and other technical details in appendix slides,
but it’s important to be able to tell your story in about 10 slides if possible.
3. Record yourself presenting your elevator pitch in less than 1 minute and without using a
slide deck. Pay special attention to your body language, eye contact, and movements. Play
* http://www.designpublic.in/.
† http://www.gew.co/.
back your presentation and watch carefully. What were your strongest points, and what
points need improvement? Play it back in fast forward too. Are there any body language or
movement patterns you’ve picked up on that need strengthening?
4. Get in touch with three to seven potential supporters and conduct informational interviews.
Remember to be prepared with the information and ideas you’re looking to exchange with
this person and your objective for each interview. Then follow up in a timely manner to
thank them and make sure to note down their recommendations and potential next steps.
CHAPTER SUMMARY
◾◾ In this chapter, we talked about how to get out there and rally support for your venture.
You’ll need to approach potential funders, advisors, and other types of supporters.
◾◾ The key tool in your artillery for this is your business plan. You’ve already been assem-
bling the different components over the last few chapters—now it’s time to organize it
into a document or slide deck to present to potential supporters.
◾◾ Every social entrepreneur needs to be prepared to pitch and present his or her venture
to a variety of audiences in different settings. One of these is the elevator pitch, which
summarizes the key concepts in under a minute and leaves the audience wanting more!
◾◾ Once you’re prepared with your business plan and elevator pitch, it’s time to hit the
pavement and build your network. You can do this by organizing informational inter-
views, attending conferences and other events, and joining networks on your subject
matter or on social entrepreneurship in general.
◾◾ One of the first milestones in building your network of supporters is assembling your
advisory board. This is not required but is highly recommended. Your advisory board is
a group of volunteers with expertise in an area you’ll need guidance in moving forward.
◾◾ Other resources that will help you build your venture include mentors, coaches,
coworking spaces, incubators, accelerators, conferences, contests, fellowships, and
other networks and events.
Company profile: Root Capital, www.rootcapital.org.

Information extracted directly from website.
Product/service: Nonprofit social investment fund that lends capital, delivers financial
training, and strengthens market connections for agricultural small and growing businesses.
Goal: Building a thriving financial market to serve agricultural businesses that generate
long-term social, economic, and environmental sustainability for small-scale farmers and
their communities around the world.
How it works: Root Capital works in poor, environmentally vulnerable places in Latin
America and Africa. Root Capital’s lending is directed toward businesses that are too big
for microfinance but not yet able to secure credit from conventional commercial banks, “the
missing middle” of developing world finance. Root Capital provides capital and training to
ensure volume and quality, and links these businesses with the global market, helping forge
contracts with buyers.
Chapter 10
Funding Your Venture
Now that you’ve assembled your business plan and are ready to pitch it, it’s time to go out there
and secure resources to get your start-up going! In this chapter, we’ll talk about funding options
to finance your venture. Before you decide if and how to register your organization, it’s important
that you’re able to navigate the different sources and types of funding available to social entrepre-
neurs and understand the different social investment approaches.
Sources of funding include private funds, individuals, governments, multilateral agencies, and
NGOs. Common funding vehicles provided by these different sources include donations, awards,
grants, loans, and equity. And depending on what the funder asks from you in return, there are
different approaches to the who, what, when, where, and how of funding.
We’ll proceed through each of these subtopics one at a time so that by the end, you’ll have a
complete picture. Ultimately, the funding sources you pursue should be informed by your business
model—and not the other way around.
Creating Your Resource Dashboard

Before we dive in, let’s make sure you have a tool in hand to help you manage all this information.
With all the different resources available to you, different ways to raise money, different sources of
money, funding vehicles, and investment approaches, it is easy to get overwhelmed and not know
where to start. Take some time upfront to create a resource dashboard. This is a way to organize
the different resources at your fingertips, to make sure to approach them in a well-thought-out and
strategic manner, rather than an ad hoc manner.
Your timeline for tapping into specific resources should be based on your venture’s stage of
growth and level of maturity. For example, you may want to focus more on nonfinancial support
such as technical expertise, networking leads, advisors, and other forms of supporters before you
approach funders. You may want to flag certain people to touch base with down the line, when
you are ready to make use of their area of expertise. You may also want to circle back to certain
people to keep them posted, and timing is everything. Don’t overbombard people with e-mails or
requests for meetings, but make sure you stay on their radar with timely updates (even once a year).
Remember, you are in this for the long haul.
195
It is important to be both resourceful (making the most use of your resources) and strategic at
the same time, about how and when to make use of your resources. Especially when meeting with
potential funders, you only get one first impression. While it’s crucial to get enough funding early
on to avoid running out before you’re self-sufficient, you also don’t want to approach prospective
funders before you’re ready for your next stage of growth or at least have information about what
the next stage(s) will entail and when.
Your dashboard may look something like the sample template in Figure 10.1. The different
tabs contain information on resources available to you for your proof-of-concept stage, for when
you launch your venture, and for your later growth stages. This way, when you come across infor-
mation now on resources available to mature social ventures, you can file it away for later. Most
importantly, it’s need-driven, so you write down your venture’s needs first and then go out there
and find the resources to meet those needs (Figure 10.1).
In the funding world, the three stages represented in the different tabs in Figure 10.1 are often
referred to as the seed-funding, series A, and series B funding rounds. Different investors are specialized
in different stages of maturity, so using a resource dashboard can help you figure out and keep track of
which sources of funding you qualify for at each stage, and keep this information on your radar as you
progress. You can either use this template or create your own, but in either case, it’s crucial to keep track
of all resources you come across (whether people, events, deadlines, sources of expertise, or sources of
funding) and organize your timeline to make the best use of resources at the optimal time.
Tab 1: Proof of concept Tab 2: Launch Tab 3: Growth

Expertise needed People to talk to
- -
- -
- -
- -
Funding needed Prospective funders
- -
- -
- -
- -
Targets for each stage Tools and resources for Each Target
- -
- -
- -
- -
What does your product or service look like after each stage?
Figure 10.1 Resource dashboard template.

Funding Your Venture ◾ 197
Sources of Funding
Multiple sources of funding are available to you at multiple stages throughout your venture.
Depending on your stage of maturity and the activities you intend to implement, you could be
eligible for more than one of the following sources. Let’s start by going through them one by one,
and then we’ll talk about the different funding vehicles and approaches found across the different
sources of funding.
Governments
Government agencies may provide funds for research and development in specific subject areas
and also in some cases seed funding for new ventures. Research funds are often earmarked for
researchers based in universities, research institutions, or smaller organizations specialized in a
specific subject. For example, the US Environmental Protection Agency allocates research funds
to a range of researchers including university-based, non-profit-based, and even those based in
private consulting firms. If you are a smaller social venture, a strategic way to increase your com-
petitive edge when bidding for government funding is to partner with university researchers with
a longer track record.
Government agencies may also provide start-up funds and other resources to encourage new
ventures, whether commercial or social or both. There are an increasing number of government
agencies and programs specialized in innovation. These can sometimes exist within the framework
of a subject-specific agency or within the framework of a subject-agnostic program specialized in
fostering entrepreneurship. Check for programs available in your country to support social entre-
preneurs domestically. Don’t forget that there could be both nationwide programs (like Start-up
Britain* in the United Kingdom or the Spark Programs† in the United States) and more local
programs (like Green Economy Malaga‡ in Spain).
In addition to fostering social entrepreneurship in their own country many governments also
extend funding to social entrepreneurs in other countries through their international aid agen-
cies. Most governments have a specialized agency to disburse funds for international develop-
ment. A few examples include JICA, DANIDA, SIDA, and Norad (Japan, Denmark, Sweden,
and Norway, respectively); Italian and Dutch Development Cooperation Programs, USAID and
UK-DFID, India’s DPA, and China’s MOFCOM, to name a few. In recent years, there has been
an increase in the availability of aid monies to social entrepreneurs as part of an international
development strategy to empower citizens, so be sure to check for such resources in the country
you are working in.
Multilateral Agencies
Beyond the resources provided by individual governments in their home countries or abroad,
multilateral agencies bring together funds from multiple governments around the world, to allo-
cate to specific causes. For this reason, they are also often referred to as intergovernmental agencies.
The World Bank and UN agencies are among two of the largest and most well-known exam-
ples. The World Bank focuses on poverty alleviation and provides financing and programmatic
* http://www.startupbritain.org/.
† http://www.state.gov/e/eb/cba/entrepreneurship/spark/239681.htm.
‡ http://greeneconomy.bio/.
support to governments for sustainable development. Its regional equivalents are the Inter-
American Development Bank, African Development Bank, and Asia Pacific Development Bank.
The European Bank for Reconstruction and Development and the Development Bank of Latin
America are other similar examples. While these funding institutions often finance large-scale
private-sector enterprises, they increasingly are supporting initiatives to foster social entrepre-
neurship in emerging markets all over the world. The UN Development Group includes spe-
cialized agencies focusing on specific social challenges. These include UNICEF, UNDP, UNEP,
UNESCO, and ILO. Multilateral agencies are responsible for disbursing funds from their member
governments within the context of each agency’s mission and scope; this often involves partnering
with local actors such as social entrepreneurs.
NGOs
Social entrepreneurs may also turn to NGOs for funding. NGOs include any private association
organized by individuals having a common purpose. (This includes many social enterprises in
fact!) NGOs can either implement their own programs, products, and services or they can provide
funding to other implementing organizations to help fulfill their mission. (Some do both!)
As an example, let us look at two organizations based in the United States and United Kingdom,
respectively, and operating worldwide. MercyCorps is a US-based NGO tackling poverty and
injustice by building safe and productive communities.* MercyCorps operates internationally and
its staff implements various programs related to social determinants of poverty and injustice. At
the same time, it provides funding to local organizations and entrepreneurs worldwide to help ful-
fill its mission in the local context. Oxfam is an international NGO headquartered in the United
Kingdom that also implements a multitude of programs related to poverty reduction and social
justice. Oxfam also partners with local organizations and entrepreneurs in countries all over the
world to create solutions to these challenges.†
Numerous NGOs around the world focus on various sustainable development goals and may
offer funds to local organizations that can help them deliver their mission. Usually, they will
advertise such funding opportunities through civil society media, newsletters, and listservs, so
make sure you familiarize yourself with these media outlets in the area you are operating.
Foundations
There is one type of NGO that you should especially be familiar with.
Foundations are nonprofit organizations that were formed for the purpose of funding and sup-
porting other social purpose organizations.‡ This is a type of philanthropy, the practice of promoting
and supporting social welfare. Historically, some foundations have been formed by individuals or
families and have commonly been referred to as private foundations; well-known examples are the
Ford, Rockefeller, MacArthur, Hilton, Moore, Gates, Hewlett, Dell, Clinton, Qatar, and Nuffield
foundations.§ Other foundations have been formed by public entities or communities and are com-
* http://www.mercycorps.org.
† https://www.oxfam.org.
‡ http://grantspace.org/tools/knowledge-base/Funding-Resources/Foundations/what-is-a-foundation.
§ For more UK foundations, see “A review of UK foundations’ funding for international development,”
available at http://www.nuffieldfoundation.org/sites/default/files/files/NUF1272_Global_grantmaking
_FINAL_18_01_12.pdf.
monly referred to as public foundations; these are often location specific, aiming to support a specific
geographical community* or, in some cases, a subpopulation.† There are also many foundations that
were formed for a specific cause, such as the Ms. Foundation, Sierra Club Foundation, and STARS
foundation, which focus on working with women, nature, and children, respectively. Increasingly,
corporate foundations are also becoming major players in the nonprofit world, as many large corpora-
tions dedicate resources to increase their social impact. Common examples from everyday companies
include Coca Cola, Pepsi Cola, Starbucks, Nike, Shell, and Google Foundation.
Investment Funds
Investment funds can be private or public, profit driven, or nonprofit. Individuals can come
together to form investment funds, pooling their resources and dividing the profits. Banking
institutions also have their own investment funds, which individuals or organizations can choose
to put their resources in. There are many different approaches to investment, and this chapter
will focus on social investment, which we’ll talk more about in a further section, but for now, it’s
important for you to be aware that there are private sources of funding for social entrepreneurs.
It’s also important for you to be familiar with the traditional sources of funding for commercial
entrepreneurs, to understand the full spectrum of financing for start-ups and the different ways in
which it is practiced. One of these is venture capital (VC).
VC firms focus on financial growth, not social returns to investment. In most cases, if a VC
fund invests in your start-up, they will own a certain percentage of it and will have decision-
making power. This is to ensure that they can influence the direction in which the start-up grows,
leveraging the experience and expertise of the venture capitalist to help the entrepreneur achieve as
much scale as possible and usually as fast as possible. The venture capitalist is taking a high risk in
investing in an entrepreneur and takes this risk because there is a chance of high financial return.
VC is a much sought-after source of funding for commercial entrepreneurs, but not so much for
social entrepreneurs. Private equity is another form of funding you will hear about in the com-
mercial world, but unlike VC funds, private equity funds target larger companies, not start-ups.
Other forms of funding that are more tailored to social entrepreneurs, such as impact investing and
venture philanthropy, have developed over the years and have stemmed from VC approaches. We will
learn more about these later in the chapter. Many venture philanthropists and impact investors begin
their careers working in VC and finance, and then go on to apply those same techniques (analyzing risk,
maximizing reward, and systematically collecting data to inform decisions) to social impact.
Individuals
Individuals can be sources of funding for social entrepreneurs, whether philanthropists seeking
social return on investment or investors seeking both social and financial return. During early
stages of developing your social enterprise, two types of individuals you may want to approach
include the following:
◾◾ Angel Investors and Philanthropists

An angel investor is another type of private sector investor commonly sought after in the
world of commercial entrepreneurship. This expression simply refers to the idea that an angel
* http://foundationcenter.org/findfunders/topfunders/top25giving.html.
† http://en.cydf.org.cn/OurHistory/.
investor is an individual with the means to support an entrepreneur, who might be willing
to take a chance on you and your idea. It is different from the types of investors listed previ-
ously because it is a person, not an organization. These persons have the discretion to decide
whether and how to use their own money. They are always on the lookout for people out
there to change the world, who they can support, and help make it happen. Angel investors
sometimes form networks to bring angels and entrepreneurs together but still operate at
their individual discretion rather than as a company. Angel investors usually operate in the
world of commercial entrepreneurship, but some are increasingly interested in supporting
social entrepreneurs. Most ask for a financial return on investment.
Philanthropists are similar to angel investors but do not ask for a financial return on
investment. Their goal is simply to create something new, not to make money. Most philan-
thropists operate through a foundation (whether their own family or corporate foundation
or simply by donating through an existing foundation), but you might still find individual
philanthropists willing to support your social venture directly. We will delve into more
detail about the different kinds of philanthropists in the social investment section.
◾◾ Friends and Family
Smaller start-ups may choose to start with a small round of friends and family funding.
This is usually for the proof-of-concept stage of testing out the idea and demonstrating that
it works with a small pilot, after which outside funding can be secured. The founders literally
approach their friends and family to become investors, usually in return for a share of the
financial value of the venture.
Advantages of friends and family seed funding are that it is more easily accessible than
some of the institutional routes, and some entrepreneurs find it less stressful, carrying less
pressure. However, other entrepreneurs are quick to point out that it can in fact be more
stressful to ask for money from people you know, and can carry a different type of pressure
and emotional burden.
Some entrepreneurs are tempted to self-fund. They believe in their cause and in their solution so
much that they are willing to carry the financial burden themselves, with the belief and conviction
that it will succeed and they will be able to recoup their investment. However, this is highly advised
against. Not only is it financially risky, but it’s also an important part of your journey to success to
be able to rally supporters, stakeholders, and shareholders in some shape or form! You need to be
able to find enough people who believe in your vision and your ability to implement it enough to
invest in you. This is only the first hurdle of many that you will be challenged to overcome.
CSR
Approaching a corporate partner is another option for both financial and nonfinancial support.
Corporate Social Responsibility (CSR) is an increasingly common approach practiced by many larger
companies and increasingly even by smaller and medium-sized enterprises. Both privately and pub-
licly held businesses might be open to sponsoring or partnering with a social venture. This is based on
the premise that in addition to their financial bottom line, they would also like to increase their contri-
butions to the social and environmental bottom lines. Thus, they allocate resources, whether financial,
human, or structural, to growing their social and environmental impact in a positive direction.
When looking to approach a corporate partner, think about which business might have a
vested interested in your line of work. Look for mission alignment, common interests, resources,
and practices related to your venture. For example, a company focusing on the distribution of
beverages worldwide may be open to venturing into increasing access to clean drinking water.* An
insurance company would be your best bet for partnering on a risk reduction scheme for small-
hold farmers.† Large companies often launch specialized foundations to fund and focus on their
CSR work, providing financing, expertise, and other inputs.‡
Types of Funding
The types of funds allocated by the previously listed organizations and individuals can come in
various shapes and forms, which we refer to as funding vehicles. The most common types are:
Donations
Donations are sums of money given by individuals or organizations to support a cause. Donations
can be given in small amounts, like in crowdfunding, or in larger amounts, like in the different
forms of philanthropy described previously (whether from individual philanthropists or through
foundations). Donations can be given on a one-time basis or on a repeating basis such as monthly,
annual, etc. Usually, donations are given to nonprofit organizations, initiatives, or people who are
implementing something specific such as a program, service, awareness campaign, or lobbying
for a certain cause. In return, the social entrepreneur often reports back to donors, but this is not
always required. Donations do not require a financial return, only a social impact.
The word donation is often used to describe a hands-off approach whereby the donor provides
the money but does not usually get involved in implementation. When an institution provides
money in a more structured way carrying more requirements, we then refer to it as a grant.
Grants
A grant is a sum of money given to an individual or organization for the purpose of achieving a spe-
cific aim. Grants are commonly given by foundations and other NGOs, multilateral organizations,
governments, and aid agencies. In some cases, these are given out for research and development pur-
poses, in other cases for implementation of proposed programs, and yet in other cases for evaluation
and dissemination of information. Grants are usually structured in a way that requires the recipient
to propose a specific budget, letting the funder know what the money will be used for and by when.
Grants usually require a proposal process, which can vary in length and intensity depending on
the funding institution. Usually, this starts with a call for proposals, which is circulated and adver-
tised in the networks of the funding institution and on its website and social media. Networks
include mailing lists, development websites, subject-specific journals, etc. Calls for proposals can
be open ended (this is sometimes referred to as a rolling application) or can have a fixed end date.
Many grant-giving institutions issue a call for proposals once a year and have a fixed review
schedule, similar to a university application process. Others have a less regular schedule depending
on their funding and budget situation or their organizational strategy. For example, Rockefeller
Foundation has a proactive strategy whereby it actively scopes prospective grantees, depending on
subject-specific initiatives. Gates Global Challenge also has subject-specific challenges, but issues
* http://www.coca-colacompany.com/stories/slingshot-inventor-dean-kamens-revolutionary-clean-water-machine.
† http://www.trust.org/item/?map=kenyas-urban-poor-feel-the-rural-pull-as-insurance-helps-makes-farming-viable/.
‡ http://google.org/, http://www.legofoundation.com/.
these through an open call for proposals each year. Alfanar has a biannual cycle, with calls for pro-
posals in the fall and spring and sometimes reserves funds for unsolicited pitches which meet its
criteria. Governmental and multilateral agencies may issue requests for proposals more frequently
than that, depending on programming, congressional budgeting, and other considerations.
The grant application process usually requires the applicant to present a budget explaining
what the granted funds will be used for in detail and a corresponding timeline. Indicators to
measure outputs produced by the budgeted activities are also a common requirement. Grants are
usually found in subject-specific program areas (e.g., health, environment, education, financial
inclusion, and gender equity) but can also be found in programs aimed at fostering innovation
and entrepreneurship across topics. The most common duration of a grant is one year, but shorter
grants and multiyear grants are also common.
Pros and cons of grants depend on the organization they are coming from. Some organiza-
tions require a heavy reporting process, especially government agencies and multilateral agen-
cies. A commonly heard complaint among social entrepreneurs is that more time can sometimes
be required to fulfill these reporting requirements than to do the actual work! Especially when
combined with the lengthy application process and staggered timelines of various grant-making
organizations, many social entrepreneurs may find that this can become overwhelming and
counterproductive. However, many grant-giving institutions also provide nonfinancial support
such as technical guidance and expertise, and these can be found to be a huge advantage. In addi-
tion, grant-giving institutions often seek to develop a long-term relationship with the grantee (as
opposed to a one-time award), which can also be an advantage.
Awards
Awards lie somewhere in between donations and grants, in the sense that, on the one hand, they
carry fewer restrictions and commitments and, on the other hand, they are received at the end of
a structured process whereby candidates are systematically compared and assessed based on prede-
termined criteria. Awards are usually given at the end of social enterprise competitions or in asso-
ciation with specific events. Two examples from different parts of the world are the Clinton Global
Citizen Award and the King Abdallah award for youth innovation and achievement.* While the
former is a ceremonial recognition that can help to highlight a social entrepreneur’s work, the
latter is a financial award that resembles a grant. Banks and other commercial institutions are
increasingly offering such awards. They are most often awarded as a one-time gift. Awards can also
come in the form of free consulting—this is commonly found in social entrepreneurship contests,
which are held by universities and other organizations.
Awards are similar to donations in that they are less likely to be associated with specific bud-
gets, targets, and timelines like grants are. However, they are similar to grants in that they are
awarded in return for a competitive process, whether the social entrepreneur is assessed for an
early-stage idea or a later-stage development that has already shown results.
Loans
A loan is a sum of money that is given to an individual or organization and must be returned.
This is commonly referred to as credit or debt. Loans usually carry interest, which means that in
addition to repaying the original amount (also known as the original capital), you need to pay an
* https://www.clintonfoundation.org/clinton-global-initiative, www.kaayia.jo.
additional amount in the form of a percentage. The percentage can range widely. Sometimes, it is
matched to the rate of inflation so that the lender is neither gaining nor losing money. (Because
the value of money decreases over time due to increasing prices, otherwise known as inflation, by
the time the loan is repaid, it is worth less than when it was issued.) This is often referred to as a
low-interest loan. Lenders specialized in the nonprofit sector may also issue a zero-interest loan,
which only requires the original capital to be returned.
In most cases, the interest is larger than inflation because the lending institution or individual
is relying on this loan to generate an income. However, funders specialized in social ventures usu-
ally minimize the interest because their goal is to grow your social impact and they are wary of
putting you at a financial disadvantage.
Many social entrepreneurs have a fear of loans because it is money that they are required to
return to the funder. Certain cultures around the world are more credit-averse than others.* To
qualify for a loan, you must demonstrate to the creditor (the individual or institution issuing the
loan) that you have the capacity to generate enough revenue to pay it back. Regardless of the suc-
cess of your venture, you are still obliged to return the loan.
However, the advantage of a loan is that it can give you more freedom than other forms of
social investment such as grants or equity. You are accountable to paying it back, but you are also
usually free to use it as you see fit to achieve your social mission while generating the required
financial return for your venture and for your creditor.
Equity
Equity refers to a financing mechanism whereby the funder owns a part of your venture, often
proportional to the amount of money they have given you. Equity investors are referred to as
shareholders. A share simply refers to a part of the company, and a shareholder is someone who
holds a part of the company. Types of funders most commonly associated with equity investment
include venture capitalists, private equity firms, and individual investors (whether angel investors,
or friends and family). Regardless of who your funder is, if you’re working with equity the basic
core processes are more or less the same.
First, the venture is valuated. This means an estimate is made of the financial value of the prop-
osition you are offering. How much is your venture financially worth? This is calculated according
to projected future revenues. Let’s say your venture is valuated at $1 million. If a funder invests
$10,000 in your start-up, they will own 1% (i.e., 10,000 divided by 1 million). Next, a term sheet
is drawn up that sets out the agreement between the funding and funded party. This is similar to a
grant agreement and a loan agreement. The terms of the agreement specify for how long the equity
is initially held (e.g., three to five years while the venture is growing). After this initial period, the
funder may have the option to hold onto their share, if they desire to maintain ownership; or cash
out, if the entrepreneur is able to buy back their share by paying them the same percentage value of
the company’s current worth at the time. This may or may not equal the initially forecasted value.
If the company grows more than was projected, the funder will take away a larger financial sum
than they invested, and if the company grows less than projected, the funder could end up losing
their money. The funder also has the option of selling to another investor, other than selling back
to the social entrepreneur.
* http://www.ssireview.org/blog/entry/fueling_financial_innovation_in_the_middle_east.
The most striking difference between loans and equity is that loans must be repaid, regard-
less of the outcome. Whether the venture succeeds or not, the entrepreneur is held liable for the
loan, and the funder will get the money back. For equity, however, the funder is not guaranteed
to get the money back. The funder simply owns a part of the venture; so if the venture succeeds,
they have the option of selling this ownership for cash, but if it does not, then there is no financial
return. Another characteristic of equity is that ownership often confers decision-making power
(unless this is waived). Of course, in the previous example, 1% ownership does not give much
power to the individual funder. However, in many cases, the group of individuals investing in a
company can add up to a large percentage of ownership, so that they can influence outcomes and
decisions made. Also, some equity investors may impose stringent criteria before getting involved,
such as the larger impact investing firms. Therefore, some entrepreneurs would rather take the risk
of having to pay back a loan rather than share ownership with funders. Others might prefer the
support of equity versus the liability of loans.
Interview Box. Sir Ronald Cohen, Chair, Portland Trust;

Chair, Global Social Impact Investing Steering Group;
Cofounder and Former Chair, Big Society Capital
TC: Sir Ronald, I was hoping you could tell us a little bit about the
latest developments in financing for social entrepreneurship.
RC: It’s a revolution in the making, aiming to improve the lives of
those in need. The G8 Taskforce, which I chaired, has been
succeeded by a Global Steering Group, which includes 13
countries. I’ve just come from one of its meetings, and what
is clear across these countries is the extensive efforts to mea-
sure results and to remunerate social entrepreneurs for social
outcomes. This is the fundamental idea behind social impact
bonds (SIBs).
TC: Tell us more about SIBs.
RC: SIBs are a vehicle for achieving tangible outcomes—improved enrollment rates,
improved employment rates, etc. Governments, corporations, foundations, and oth-
ers can target social challenges through social impact bonds. If the social entrepreneur
achieves results, the investor is reimbursed and receives increasing interest according
to their success. This has been used by countries all over the world to tackle various
challenges such as reducing higher education dropout rates, reducing the rate of dia-
betes and other chronic diseases, and many other topics. It’s replicable and applicable
across sectors.
TC: How are SIBs and other new financing mechanisms influencing social entrepreneur-
ship worldwide?
RC: Social entrepreneurs up until now have tended to focus on raising grants and dona-
tions. The big change that has occurred since 2010, when the first SIB was launched
in the UK, is a realization that if you can deliver social improvements, you can repay
your investors. This effectively means that social entrepreneurs can create their own
balance sheets to support their efforts by monetizing the social improvements they
bring. At the same time, the measurement of impact has led social entrepreneurs
using a profit-for-purpose model, as opposed to a not-for-profit one, to define impact
objectives alongside financial ones. We’ve come to define impact entrepreneurship
as encompassing two avenues: not-for-profit organizations and profit-with-purpose
businesses. SIBs are mainly for nonprofits. Profit-with-purpose businesses can access
equity and debt, to pursue opportunities that deliver both financial and impact
returns, often innovating through models that allow lower price points for the con-
sumer and require lower capital investments.
TC: What are some examples of innovative financing from around the world?
RC: The best example is the UK. The government used unclaimed assets: they took bank
accounts that had been separated from their owners for 15 years and allowed the
funds, 400 million pounds, to go to Big Society Capital to invest in organizations
funding frontline social organizations. This was supplemented with 200 million
pounds from banks. So, an entrepreneur in the UK is now able to go to scores of orga-
nizations and social investors to raise money—a range of choices. Japan is now also
releasing $800 million in unclaimed assets from banks. Australia is making an effort
to set up a financial wholesaler of capital for social impact. So there is a bubbling of
activity, which feels a bit like the early days of VC.
Photo from http://www.portlandtrust.org.
Social Investment Approaches

These different funding vehicles and sources can be combined into different investment approaches,
depending on the goal of the social investor. You’ll be hearing a lot about these different social
investment approaches, so you’d better familiarize yourself with the basic definitions of each and
some of the major players.
As we discussed in Chapter 1, social entrepreneurship lies on a spectrum between traditional
charity and traditional commerce. Where traditional charity involves giving away money for
social impact, traditional commerce involves making money without necessarily considering the
value of the social and environmental outcomes produced. Social investment refers to the differ-
ent approaches that lie between traditional charity and traditional commerce, in terms of fueling
social entrepreneurship, with regard to both financial and nonfinancial resources.
All of the funding vehicles described previously are considered different forms of social invest-
ment. All of the funding sources described also consider themselves social investors. When they
provide you with funding or other forms of support, they are investing in you as a social entrepre-
neur. They are adding their resources (whether money, social networks, or technical know-how)
to yours to help you get to the results you’re aiming for. It’s important that you understand the
world of social investment and the different players in order to be able to navigate that landscape.
Crowdfunding
Before we dive into large-scale investors, it is important to mention the crowd. Ordinary people
who do not have large amounts of money can still think of themselves as social investors. They
can lend money to people living in poverty to help them build small businesses (such as Kiva.
org, which we talked about in Chapter 1), donate to help support an inspiring idea come to frui-
tion (such as the crowdfunding websites described in Chapter 9), or invest their money in social
ventures through the increasing number of crowd investing platforms (such as the new Vested
.org, which allows investments of as little as $20). All these activities and funding mechanisms
are considered social investment: putting resources into a social venture to help it grow and cre-
ate change. If your social venture appeals to the crowd, then this can be an important source
of funding for you. In fact, some social ventures have built their business model entirely on
the assumption that crowdfunding is a sustainable source of revenue (see, for example, www
.crowdfundhealth.org).
Philanthropy
Philanthropists are individuals who donate large sums of money to help create something that
didn’t exist before, or help sustain or grow an existing venture or initiative. Philanthropists can help
create or support new movements or institutions like universities, museums, theaters, hospitals—or
they can support a person or group of people in their work, like artists, scientists, activists, or social
entrepreneurs. As mentioned previously, many philanthropists donate through a foundation and
others donate individually to different causes. While philanthropists are in it for the social change
and not the money, they may sometimes ask you for a financial return on their investment so that
they can then invest in other social entrepreneurs as well. There are specialized approaches in phi-
lanthropy, with some huge similarities and some key differences.
Strategic philanthropy refers to the practice of philanthropy to achieve predetermined goals
by studying what milestones are needed to reach those goals and taking an active role in making
sure that those milestones are achieved. Strategic philanthropists are working toward specific
social outcomes and thinking about how to invest their money to best achieve those outcomes.
We use the word invest here to demonstrate that strategic philanthropists evaluate the return
on investment in terms of what social outcomes will be produced if they support something.
Many foundations practice strategic philanthropy, raising funds from individual or institutional
investors (including governmental, multilateral, or private) and channeling those funds to sup-
port social ventures, often providing nonfinancial resources such as technical support to help
recipients produce a larger impact. Grants are the primary funding vehicle in the large majority
of cases. Recipients are required to produce social outcomes, but they are not always required to
generate financial revenue, so strategic philanthropy can be a helpful funding source for nonprof-
its. Along those same lines, catalytic philanthropy refers to an approach whereby the philanthropic
organization takes responsibility for the outcomes, mobilizes others and uses all available tools,
generating actionable knowledge to develop the field further.* Examples of foundations practic-
ing catalytic philanthropy are the Gates Foundation and Rockefeller Foundation, among many
others.†
* http://www.fsg.org/approach-areas/catalytic-philanthropy.
† http://www.gatesnotes.com/About-Bill-Gates/Catalytic-Philanthropy-Innovating-Where-Markets-Wont.
Venture philanthropy refers to the practice of providing financial and nonfinancial support
using a hands-on approach over a long-term investment, with predefined exit criteria that the
organization is working to achieve before the investor withdraws support. Venture philanthropy
organizations (VPOs) maintain a portfolio of investments—social ventures receiving sup-
port from them—and evaluate the impact of their portfolio, reporting back to their investors.
Investors can include individual philanthropists or institutions (including government, multilat-
eral, and private institutions). Most VPOs require that their investees (the social entrepreneurs
and organizations they invest in) generate a financial return; however, the return is intended for
the investee to grow, not for the VPO to generate a financial return on investment. Examples of
VPOs from around the world include New Profit in the United States, Social Ventures Australia,
and Alfanar Arab venture philanthropy; numerous multiple VPOs in the United Kingdom and
Europe can also be found under the umbrella of the European Venture Philanthropy Association.*
Depending on the organization, financial vehicles used in venture philanthropy can include
grants, loans, and equity.
Impact Investing
Impact investors require both a financial and a social return on their investment. This can take
place in the form of either debt or equity. Some impact investors, like Acumen Fund and Echoing
Green, are nonprofit organizations that reinvest the financial returns into other organizations and
expand their impact without distributing any financial gains to their donors. Other impact invest-
ing firms operate in a for-profit capacity, distributing financial return to their investors in addi-
tion to reporting on their social impact. Private impact investing firms are sprouting up all over
the world, where individuals and institutions pool their money for both financial gain and social
impact. In between the two is also another type of nonprofit organization that leverages private
capital for social impact and returns financial gains to investors, and then reinvests any remaining
profits for social impact rather than distributing dividends. A good place to read about the wide
spectrum of impact investors is the Global Impact Investing Network (www.thegiin.org).
Private investors are willing to put their money in ventures that may generate less financial
return than the commercial averages, in favor of generating social and environmental returns.
Impact investors valuate the total output produced: financial, social, and environmental. This
is in contrast with traditional commercial investors which valuate only the financial outputs of
investees. Each part of the world uses different terminologies and legal frameworks, but the core
concepts are the same. In Europe, an investment fund qualifies as a Social Entrepreneurship Fund
if at least 70% of its capital is invested in social businesses, defined as having a supply chain or end
user composed of vulnerable or marginalized, disadvantaged, or excluded persons.†
Socially Responsible Investors

Socially responsible investing is a domain inhabited by investors who come from the commercial
sector but want to make sure that their investment activities are not producing social and envi-
ronmental harm. They are looking for investments that can generate large financial returns (larger
than impact investing would) but they are also looking for information on the corporate social
* http://evpa.eu.com (includes both VPOs and foundations practicing venture philanthropy among other
activities and program areas).
† http://www.oecd.org/sti/ind/social-impact-investment.pdf.
responsibility of their investees. They want to make sure that the companies they’re supporting
have policies and practices in place to ensure that they are reducing their carbon footprint, con-
tributing to their communities, and providing social benefits to their employees. While this is a
slightly different field of practice than what this book focuses on, it has huge implications for social
entrepreneurs. Socially conscious investors and socially conscious customers who want to know
more about the products they are buying play a powerful role in shaping the market.
Finding the Right Approach for You

The social investment vehicles and approaches described above are not mutually exclusive. You
can combine more than one at the same time, and you can leverage different approaches at differ-
ent points in the life cycle of your venture. Awards and donations might be more helpful during
the seed stage of your venture, when you’re still prototyping, testing, and establishing proof of
concept. Grants, loans, and equity will come into play when you want to formally launch your
venture. In Chapter 11, we’ll talk about different registration options for formally launching your
venture. If and when you reach a stage where you need to invest in growth, whether by opening
new sites or expanding existing operations, you may need to go for additional funding rounds.
As you grow and your revenue becomes more predictable, investors at the tail end of the social
investing spectrum will become more interested. If you can generate enough financial return for
both your social goals and your investors, then impact investing could be a good fit for you. This is
often the case in environmental entrepreneurship, whereby you are solving a problem that impacts
people in both high resource and low resource settings. The volume and distribution of the chal-
lenge you are tackling enable you to generate significant financial revenues while implementing
your solution and in order to reach those volumes you need to be fueled by large scale investors.
On the other hand, if you can generate enough financial return for your organization to function
sustainably, but not to generate profit for yourself or anyone else, than you are more likely to find
support from a VPO. Many social entrepreneurs may not even qualify for a VPO if they employ
a business model that relies on donations and grants to a large extent rather than trading activity;
in this case, a foundation employing strategic philanthropy might be your best bet. Depending on
where you lie along the social entrepreneurship spectrum between traditional charity and com-
merce, you will find your match along that same spectrum on the social investment side.
Many social entrepreneurs start on one side of the spectrum, closer to traditional charities,
and slowly inch forward along the spectrum until they are closer to traditional commerce. Such
examples might benefit from different social investment approaches at different stages along the
way. In fact, some VPOs make it part of their job to help you increase your cost recovery; for
example, you could start out as a venture that relies largely on grants and donations, and by the
time they exit, you might have reached, passed, or approached breaking even.
What you decide to do with your profits will be a huge part of your decision on which funders
to approach. Many social entrepreneurs believe strongly that they want to focus all their energy,
creativity, and resources toward producing social outcomes and that all profits will be reinvested
toward those outcomes. Others feel convinced that profit will drive scale. There is no right answer.
The important thing is to find a social investor whose mission and approach is aligned with yours
and who can support you in reaching your goals without trying to drive you in a different direc-
tion than where you set out with your vision.

The sources and types of funding and the different approaches available to you depend on your
business plan, your end goals, and how you intend to get there. Whatever your model, you will
find the right fit to fund it. Be wary of changing your model to become the right fit for funders—
you’ve invested a lot of time, resources, and work (both your own and your stakeholders’) to find
the best business model to reach the social outcome you’re working for. You need to believe in your
solution and make others believe in it too. The social investing landscape is complex and dynamic,
with different approaches sharing overlapping characteristics, and various combinations of fund-
ing vehicles and sources. Navigating this landscape can feel overwhelming, and the surest way
to maintain integrity to your business plan is to take a needs-based approach as outlined in your
resource planner. Most importantly, make your decisions along with your team, advisory board,
and other stakeholders.
How you formally set up and register your social venture will also depend on your business
model: your revenue streams and what you plan on doing with surplus revenues are key factors in
determining the legal form your organization takes. This in turn can affect the sources and types
of funding you’re eligible for. In Chapter 11, we’ll examine different options for formalizing your
venture, whether within an existing organization or by registering a new organization.
Exercise: Funding Your Venture

1. Create your own resource dashboard starting with the template in Figure 10.1 and tailor-
ing it to your needs. Start by populating it with the nonfinancial resources you explored in
the last chapter. Next, add the funding sources, noting the different types of funding each
source provides. Which resources are available to you right now as you develop your venture?
Which will you be eligible for in the early years after launching, before breaking even?
2. Share your results with your team and advisory board. Are they familiar with any of these
sources, vehicles, or approaches? Do they know additional ones you can add?
3. Conduct informational interviews with five to seven potential funders, either in person or
virtually. This will help you determine whether their approach and requirements are a good
fit for you and how you might prepare yourself to qualify as a strong candidate.
4. According to your pro forma, do you expect enough financial returns to qualify for social
investors requiring both social and financial return on investment? Incorporate potential
funders into your scenario analysis in terms of where your surplus revenue will go if you
pursue loans or equity. How will this affect your financial estimates, timeline, and phasing?
5. Do any of the funding sources, vehicles, or approaches specify certain requirements or
restrictions that might affect your legal registration options?
CHAPTER SUMMARY
◾◾ Social entrepreneurs have a wealth of funding opportunities to choose from and more
importantly can catalyze new opportunities. One way to explore your various options
is to examine the different funding sources, vehicles, and approaches.
◾◾ Sources of funds can range from individuals and private investment funds to corporate
funding, government funds, multilateral organizations, and NGOs, including foundations.
◾◾ Types of funding vehicles include donations from individuals or awards from insti-
tutions, which are usually given with no strings attached; grants from institutions,
which are given for specific objectives; loans, which can be provided by either indi-
viduals or institutions and must be repayed; and equity vehicles, which confer partial
ownership to the individual or institution providing funding.
◾◾ Social investment is a growing field in which individuals and institutions apply a wide
range of approaches to support social ventures. Depending on the objectives of the
funder and what they expect to receive in return, social investment can include more
than one of the above sources and vehicles. All social investors require a social return
on investment, and some require a financial return on investment too.
◾◾ Your social venture may qualify for more than one of these options at the same time
or over various stages in its life cycle. The key is finding the right fit for you and your
stakeholders, based on the business model you’ve co-created.
◾◾ Like everything you do as a social entrepreneur, don’t assume that the status quo of
social investment is the way things have to be. Bring together new players, catalyze new
conversations, and find new ways of mobilizing financial and non-financial resources.
Company profile: Crowdfund Health, www.crowdfundhealth.org.

Product/service: Online platform linking people who need funding for a health service
with people crowdfunding that service by giving as little as $10 per person.
Goal: Remove barriers to treatment by funding medications, transportation, testing, and
healthcare for patients in resource-poor settings.
How it works: The business model is premised on the assumption that there are enough
people out there willing to crowdfund health services for others and that this is a source
of revenue that can be counted on. Health services are delivered by a possible, nonprofit
healthcare company that delivers high-quality, low-cost healthcare in low-resource settings.
A network of partner organizations manages the financial platform, social media, and other
communications.
◾ 211
Company profile: Vested.org, www.vested.org.

Product/service: Online platform where you can make impact investments through Calvert
Foundation’s Community Investment Note®.
Goal: Fund nonprofits and social enterprises around the globe.
How it works: Calvert Foundation pools individual investments to make loans to organiza-
tions including non-profits, microfinance institutions, and social enterprises. Investors earn
financial and social returns, receiving annual interest and reports on the social impact their
investments create.
Chapter 11
Building the Organization
Now that you’ve developed a sense of the various funding opportunities available to you, it’s time
to start thinking about how you will build your venture and institutionalize it for sustainability.
The different options available to you will depend on the country you’re operating in and on your
business model of course. In this chapter, we will explore various legal structures and other com-
ponents of institutionalizing your venture, including your internal governance and composition.
Legal Structure
When to Register
Before launching your venture, it’s worth stopping and asking yourself whether you really need to
register and build an entire organization starting from scratch. Is it possible to launch your ven-
ture from within an existing organization? It could be a new department, program, or project of
a larger organization; a new branch; a joint venture; or a variety of other creative setups. If you’re
able to identify someone else who’s working toward and dedicated to the same mission as you, then
why are you starting your own organization?
Setting up an organization is costly. It requires time, resources, cash, legal expertise, paper-
work, and ongoing tax and maintenance fees. Not only the setup but also the ongoing costs
required to run an entire organization are not to be underestimated. Your brain space alone is a
valuable piece of real estate, and if there is any way to free it up from the start, then it is advisable
to at least explore this option.
A large part of this chapter will be dedicated to learning about legal options to register an
organization and other aspects of creating and growing a new organization. But before we start,
know that this is not your only option. In fact, many established and successful entrepreneurs and
serial entrepreneurs have advised against it in their public speaking.
This is especially the case for social ventures that will seek out grants and donations as part of
their revenue stream. The market will determine whether there is a space for a for-profit venture,
and funders seeding the start-up costs of a for-profit are not likely to support it if they do not
believe there is a market to keep it going. Too often, however, passionate individuals raise dona-
tions to start a nonprofit, without having a vision of whether the work can be achieved without
213
investing all the time and money required to build an organization. Their cause draws attention,
but they struggle to build and sustain the organization.
If you are starting a new nonprofit, ask yourself first what value you are adding that cannot
be achieved by working under the umbrella of an existing organization, whether it be a nonprofit,
government, private, or academic institution. Who has started similar organizations before, and
does it make sense to join forces with them? Nonprofits often compete for valuable resources when
they could be joining forces to more effectively garner them—whether it be people’s attention or
funding.
A third option is to incubate within an existing organization and then spin out on your own.
This can provide valuable time and resources to test and refine your product or service—time that
would otherwise be spent in the red if you are out on your own, before you are able to scale and
generate enough revenue to be self-sufficient.
Can you test your proof of concept under the umbrella of a host organization before you
spin out on your own? Riders for Health is an example of an organization that was started out
of MercyCorps and then later spun out on its own when it became more financially sustain-
able.* During this time, it benefited from the human resources and existing infrastructure that
MercyCorps provided. This included administrative, legal, logistical, technical, and a host of other
resources. Even raising money may be more effective if done with a larger organization.
When you reach a stage where you need to register and open a new organization because you
will gain something tangible and crucial, then take that step. But don’t register and open a new
organization just for the sake of it.
Legal Options
If and when you do decide to register, your legal form will most likely reflect your business
model. If you are a nonprofit organization, then the most likely legal form for you will in most
cases be a charity or association, depending on the country (more later in the chapter). If your
organization is a for-profit, then depending on your country or state, you will need to either
choose from one of the traditional for-profit setups or register as a social enterprise if that option
is available to you.
Many social entrepreneurs aspire to run a for-profit business that reinvests all its profits into
growing its social impact after distributing any required returns to its investors. While you may
argue that this operation is not for profit, legal requirements in your country may not be developed
enough in the social entrepreneurship direction for you to qualify for certain registration options.
At the end of the day, many social entrepreneurs feel that it becomes more of a taxation issue and
less of a reflection of their business model and social impact model. Whatever the requirements in
your country are, let’s go through the basics first so that you can get a picture of how it works in
most places and then definitely make sure you get a few different opinions from specialized legal
professionals.
Charity
In many countries, the legal structure of a charity is suitable for nonprofit organizations, including
those that generate revenue. For those with less than 100% cost recovery (that is, where revenue
* www.riders.org.
Building the Organization ◾ 215
generated is less then expenditure toward the social mission), this is the most commonly chosen
legal option.
Each country has its own version of the mainstream charity organization legal form. In the
United States, the most common form of registering a charity is the 501c3, which you will find
for the majority of nonprofit organizations. In the United Kingdom, there are four main types of
charity structure: unincorporated associations, charitable incorporated organizations, charitable
companies, and trusts.* Checking for the type of legal registration of leading nonprofit organiza-
tions in your country is one way to find out what setups are common in your country—usually,
this information will be clearly stated on the nonprofit’s website and printed materials. Each coun-
try also has its own nuances, and it is important to understand the pros and cons of each option
before you proceed.
One of the main advantages associated with registering as a charity in most countries is that if
you need to raise money to supplement your revenue-generating activities, having a charity status
facilitates this type of fundraising. When individuals donate to charities, they receive tax deduc-
tions; this was set up by most governments in order to encourage people to give. Similarly, when
businesses and other institutions support social enterprises, they too receive tax deductions, which
provide an incentive to help catalyze these types of transactions. Most social entrepreneurs aspire
to have enough revenue generated on their own to not require donations at all. But many still rely
on this form of funding, at least partly, and especially toward the start of the venture. Others find
that tax incentives can make or break their business model! We saw an example of a social enter-
prise that leveraged this option as a resource in the Daily Table case in Chapter 5.
Some social ventures are able to generate enough revenues to equal or exceed their costs. In
most cases, this margin of profit (revenue minus cost) is reinvested in the social mission, i.e., spent
on growing the organization toward achieving more of its social impact. If this is accounted for
in the annual paperwork of the organization (reports, accounts, government filing), then it can
be shown that in fact this is not a profit-making organization because all revenues are directed
toward new costs that are incurred to achieve more of the mission. In this case, a charity registra-
tion might still be possible in certain settings. In other cases, it may behoove you to explore more
options.
Social Enterprise
Social enterprise legal options are nascent and limited in many countries. In the United States,
two options have emerged out of the most commonly found for-profit legal options, the traditional
LLC and C-Corp structures. The traditional LLC is a limited liability company; this is a for-
profit venture designed to attract private investment and is common for commercial start-ups. The
newer L3C is a low-profit LLC, which is not designed to maximize profit; its primary mission is
charitable but it is still free to distribute profit to the owners. This type of social enterprise has the
flexibility to generate profit while being driven primarily by its social mission.
The traditional C-Corp structure on the other hand is common for larger corporations (most
major companies) and is different from the LLC because it is taxed separately from its owners.
The newer B-Corp has the same tax status but with a purpose of creating public benefit, thus its
title as a “Benefit Corporation.” The formation of this newer legal option was driven by social
entrepreneurs with the purpose of promoting accountability and transparency by legally defining
three bottom lines for the organization: financial, social, and environmental. Not all states have
* https://www.gov.uk/charity-types-how-to-choose-a-structure.
L3C and B-Corp options. The Flexible Purpose Corporation is another newer option that has
passed in California and Washington (where it is called the Social Purpose Corporation). This
legal form requires boards and management to agree on one or more social and environmental
purposes with shareholders, while providing additional protection against liability for directors
and management.
In the United Kingdom, a common legal option for social enterprises is the community inter-
est company (CIC).* This was created specifically for social enterprises and is regulated by the
government to ensure that it does not deviate from its social objective. The CIC provides tax
benefits to social enterprises that have prespecified restrictions on the distribution of profits. In
the United Kingdom, for example, a CIC provides tax benefits to hybrids that agree to limit their
distributions to investors. A CIC, once given governmental approval, has its assets “frozen” and
designated for general community benefit. Investors can receive capped dividends on their invest-
ment, but the principal is never retrieved. Another option is the “group structures with charitable
status,” which recognize that the organization not only has a charitable mission but also generates
revenue and may want to retain some surplus for strategic purposes to sustain and achieve its long-
term mission.
For-Profit
The most common legal structure for commercial business in the United Kingdom is the
“Companies limited by guarantee or shares.” This is similar to the LLC and C-Corp options in the
United States. Across countries, some social ventures choose to stick with the traditional business
structure offered by these legal options because they allow for more flexibility in the company’s
internal governance structure and in getting investment. In these cases, in order to ensure that the
company operates as a social enterprise, the founders draft their own internal governance struc-
tures by incorporating the social mission into the paperwork, whether in the form of a constitu-
tion, articles of association, rules, and memorandum depending on the country. For example, a
social enterprise registered as a for-profit company will take the responsibility on its own—without
government regulation, if it chooses this option—to specify in its internal governance that a cer-
tain percentage of profits will be reinvested into the social mission. This percentage can range
widely, from less than 10% to 100%.
In most countries around the world, social entrepreneurs do not have many options tailored
to them, as specific legal structures have not yet been created for social enterprises. Thus, creating
their own clear-cut internal policies and procedures and incorporating these into their legal papers
and registration (regardless of whether they choose a charity status or a for-profit status) are their
pathway to creating their own legal structure.
Hybrid Setups
Many social entrepreneurs also opt for a hybrid model whereby they register one for-profit and
one nonprofit entity. The rationale behind registering two separate organizations is that it provides
more flexibility and allows the entrepreneur to benefit from a larger range of funding options,
from venture capital to charity donations. This option might make sense for those organizations
with a hybrid business model, as discussed in previous chapters. However, the hope shared by
many social entrepreneurs is that new forms of legal structures will emerge and grow, which will
* https://www.gov.uk/set-up-a-social-enterprise, http://www.socialenterprise.org.uk/.
provide the same kind of flexibility and consideration for their needs, rather than having to rely on
these two traditional options or a combination thereof.
In some cases, social entrepreneurs launch their start-up with a charity registration, and over
the years, as they grow and scale, they move on to start a for-profit. This was the case for One
Earth Designs, whom we met in a previous chapter. Initially registered as a 501c3, the social
enterprise later went on to register as a B-Corp to sell to the commercial market (oneearthdesigns
.com) while retaining the charity to support sales and distribution in low-income settings (one
earthdesigns.org). Another example is Embrace, the infant warmer, which also began as a 501c3
(embraceglobal.org) and later registered as a for-profit social enterprise for rapid scale of its manu-
facturing and distribution (embraceinnovations.com). In both cases, the nonprofit owns part or
all of the for-profit, a setup that gives the nonprofit power to control the activities of the venture
while protecting its social mission.
If a hybrid were to register as a nonprofit only, it could not access equity capital markets
because it can’t legally sell ownership stakes to investors. But if a hybrid were to incorporate as a
for-profit only, it couldn’t offer the same tax benefits to donors as registered nonprofits do, even if
these approaches lead to the most effective social solution.
Cooperatives
Other options available in most countries include the cooperative structure, whereby the orga-
nization is owned by a number of individuals or groups of individuals, known as members.
Cooperatives are common in the agricultural sector but are increasingly growing in other sectors,
including the service, credit, consumer, and housing sectors. In the United Kingdom, the two
main cooperative, legal structures are the industrial and provident society (IPS) cooperative and
the IPS community benefit society, also known as “bencom” or “society for the benefit of the
community.” The former is set up for the benefit of its members (in the agricultural sector this
would be the individual farmers) and the latter is set up in a way that it can benefit others in the
community, even if they are not members.* While by name the Bencom appears to be structured
similarly to the B-Corp in the United States, in practice, it has more stringent requirements to
qualify for registration as a society and not as a company, such as including a provision requiring
that its benefits will be returned to the community and not its own members. This is not to say the
United Kingdom and United States are the only countries with cooperatives! In Kenya, coopera-
tives are responsible for almost half of the gross domestic product, operating the vast majority of
the coffee market, cotton market, and other national production. In Argentina, up to a quarter
of the population is a member in a cooperative, and in Columbia, the majority of microcredit is
provided by cooperatives. In France and in Japan, 9 out of 10 farmers are members of a coopera-
tive. In Denmark, more than a third of the consumer retail market is held by consumer coopera-
tives, and in New Zealand, three quarters of wholesale pharmaceuticals are held by cooperative
enterprises.† In China, farmers’ specialized cooperatives benefit from tax exemption from selected
tax categories such as the value-added tax.†
* http://knowhownonprofit.org/basics/setting-up-a-charity/legal-forms-for-non-profits-1/ industrial-and-provident
-societies.
† http://www.bsr.org/reports/FYSE_China_Social_Enterprise_Report_2012.PDF.
Variations around the World

Some social entrepreneurs choose to register their organization in the country where they will
be fundraising (whether philanthropic or private investment funds) to facilitate these financial
transactions. Funders sometimes require this in order to ensure that the investee is abiding by
reporting requirements specified by law in certain countries. Social enterprises registered in
the United States or United Kingdom but operating in Sub-Saharan Africa or Southeast Asia
are common. This is because many funding organizations and impact investors are based in
the United States or United Kingdom and have made it their mission to support entrepreneurs
around the world.
However, many other options and legal forms are available in different countries. Sometimes,
these are still emerging into the social enterprise dialogue and entrepreneurs are not familiar
with them. Other times, they are set up by the government in order to encourage social entre-
preneurship but have not yet been fully developed to meet entrepreneurs’ needs and are not fully
adopted. Civilian run nonenterprise units and social welfare enterprises in China are examples
of options that have not been leveraged as much as traditional for-profit enterprises yet. In the
Middle East and North Africa, social entrepreneurs in most sectors are confined to the tradi-
tional for-profit or nonprofit structure, but in the education and training sectors, they have the
option of registering the equivalent of a social benefit company.* In India, nonprofit trusts or
societies have been historically prevalent in the social landscape, but social entrepreneurs are
increasingly turning to for-profit options, such as the Private Limited Company.† A comparison
of some of the most commonly registered legal forms from various countries and regions is pre-
sented in Table 11.1.
Many entrepreneurial social ventures have built their own structures and groups of structures
within these existing options, finding innovative ways to manage the different requirements and
tradeoffs of each. One example is the Groupe SOS in France, an association that consists of a
number of nonprofit organizations, which own subsidiaries with commercial activities. The com-
mercial activities are built to provide livelihoods for marginalized populations, and profits are
used to fund complementary social programs. The organizations formed an executive board with
representatives from each of the founding nonprofits, as well as a management alliance to help
optimize management across the different bodies, in areas such as finance, accounting, human
resources, communication, and other aspects of organizational health.‡
Weighing the Pros and Cons

While many entrepreneurs appreciate the freedom and creativity of forming their own internal
structure to define their social venture, others point to the disadvantages conferred by having to
choose between a charity status or for-profit status, which is the case in most countries that do not
yet have a social enterprise specific legal form. For example, auditing requirements, tax require-
ments, and other legal specifics will not take into account that the venture is a revenue-generating
impact-first organization. This can handicap the organization and have negative implications for
its growth.
* Jamali, D., & Lanteri, A. (2015). Social Entrepreneurship in the Middle East. Palgrave.
† http://intellecap.com/sites/default/files/publications/intellecap_landscape_report_web.pdf.
‡ http://www.groupe-sos.org/en/387/organisation.
Table 11.1 Comparative Overview of Social Enterprises in Nine World Regions

and Countriesa
Common Strategic
Region or Organizational Outcome Program Area Development
Country Type Emphasis Focus Base
United Nonprofit/ Sustainability All nonprofit Foundations

States company activities
United Social enterprise Social/economic Human services/ Government/civil

Kingdom benefit employment society
Europe Association/ Social benefit Human services/ Government/EU/

cooperative employment international
donorsb
Southeast Small Sustainable Employment/ Mixed

Asia enterprises/ development human services
association
MENA Nonprofitc/ Social/economic Human services/ Human services/

company benefit employment employment
Zimbabwe/ Microfinance Self-sustainability Employment International

Zambia institutions/small donors
enterprise
Argentinad Cooperative/ Social/economic Human services/ Civil society/

mutual benefit benefit employment international
donors
Japan Nonprofit/ Social/economic Human services/ Government

company benefit employment
China Company/ Sustainable Employment Mixed

cooperative development
Source: Adapted from Kerlin, J., Voluntas 21, 162–179, 2010, and additional sources.
Note: EU, European Union; MENA, Middle East and North Africa.
a The listing of regions versus countries table is based on the original analysis of Kerlin (2010).
Europe was combined as one region; MENA was added as a region because countries share
similar registration options; China was added as a country because legal setups are unique
compared with those of other countries in the region.
b International donors category applies for East and Central Europe, while Government category
applies for Western Europe.
c Nonprofit organizations are commonly registered as charities, associations, or civil society
organizations and are often referred to as NGOs.
d Kerlin uses Argentina as a representative of common registration forms and activities in Latin
American countries. Social enterprise legal guides for other select countries in South America
can be found at http://issuu.com/nesster.
Investing in a lawyer is crucial when registering your venture. It may be possible to recruit a
pro-bono lawyer who is willing to give their time at no cost, or at reduced costs. It may also be
possible to obtain legal counsel, or at least information on lawyers specialized in social entrepre-
neurship, through one of the many organizations that support the formation of social enterprises
that we discussed in Chapter 10. Universities also often have legal clinics with reduced fees that
are open to students working on registering a new organization.
Interview Box. Catlin Powers, Cofounder

and CEO, One Earth Designs
TC: Your organization started in the Himalayan Plateau and has

now expanded worldwide. How did you manage this growth?
CP: To be honest, we struggled to meet the demands of a grow-
ing worldwide organization. We started off working with
nomadic groups in a very specific setting, and we were boot-
strapping at the start. The only reason we registered in the
US (as a charity, 501c3) was because people wanted to donate
and we had to open a bank account! We won awards and
grants for our work, and registering a nonprofit organization was a straightforward
way to use these resources. But we quickly learned that there are some regions, China
included, where government suspicion towards nonprofits hinders can hinder chari-
table missions. So we set up a for-profit traditional limited company in Hong Kong,
which would be allowed to work in China. We chose Hong Kong because we wanted
this new company to be 100% owned by the original nonprofit, which would not have
been allowed in China. We now have a US subsidiary of this company, which allows
us to sell online in the US too.
TC: So the nonprofit came first, and then you went the for-profit route. How does this
affect your original target audience?
CP: It helps us reach more people on the Himalayan Plateau and other low-resource set-
tings because revenues from the for-profit businesses subsidize the nonprofit organiza-
tion. Our US subsidiary is B-Corp, which reinforces our social mission. It’s taxed the
same as the traditional C-Corp, but the incorporation documents outline optimizing
social, environmental, and financial impact as opposed to the traditional C-Corp,
which says you’re beholden to shareholders to maximize profit. Our nonprofit still
sells to rural customers and foundations serving refugees and other marginalized
populations all over the world. At the same time, we sell to customers in middle- and
higher-income settings who want to use solar power, and we use differential pricing
for the different customer segments.
TC: Were there any stages where you struggled to meet the demands of your customers
while investing in growth?
CP: We experienced rapid growth in demand for our products, which motivated us to
set up a formal manufacturing line to meet demand. To do so, we needed capital.
We wanted to engage with impact investors, and in order to do so, we created a sister
company which allowed us to expand our operations in China while maintaining

strong corporate transparency and responsible practices.
TC: Were there any advantages and disadvantages of operating in all these different
places?
CP: Each setting has its advantages and disadvantages. In Hong Kong, we first started
out paying 13–15% profits tax, while in China the concurrent laws at the time would
have had us paying 33% profits tax with other taxes on top of that, for a total of 45%
corporate tax. Right now, we’re in the process of expanding our for-profit line to
Europe, which presents a whole new set of challenges. Recent changes in European
VAT regulation have resulted in different tax rates, and we’re required to register in
each country.
TC: What advice do you have for social entrepreneurs building their organizations right
now?
CP: I want them to know that no social entrepreneur has ever had everything figured out
right from the very start. We all just do our best with the information and resources
we have at each decision point.
Photo reproduced with permission from Dr. Powers.
Organizational Health
Whether you register your social venture as an independent legal entity or as an initiative within
an existing entity, you can still apply the concepts presented in the following sections to yourself,
your work, and your team. The main idea behind the concepts presented in this chapter is to think
of your social venture as an organism. It is a living, breathing, being and it’s up to you to ensure
that it’s provided with the support system, environment, and nutrients that will nourish it and
allow it to grow.
Reflecting on your own life, when you go to the doctor or take your children to the
doctor, the doctor examines you and asks you questions and diagnoses you. She or he may
give you a mark of good health or may warn you that certain aspects of your health need
strengthening. She or he will ask you various questions about your activity patterns and your
nutritional patterns and will measure your physiological health indicators and mental health
indicators.
So too should you as a social entrepreneur observe and strengthen the health of your organiza-
tion. In the following sections, we will discuss key points that reflect a healthy organization and
how you can ensure that all these factors are in place (Figure 11.1). What does a healthy organiza-
tion look like?
What does a healthy organization look like?

Vital signs:
Governance
Financial
health
Institutional
memory
The organization
as a living, Transparency and
breathing accountability
organism
Human resources
Legal and
tax health
Information and
communication
systems
Figure 11.1 Diagnosis: all systems clear for social impact!
Financial Health
A healthy organization has healthy financial systems. What does this mean? We have already dis-
cussed the importance of having a solid business model in place, specifying your revenue streams
and expenditures. Ensuring that you are well equipped with financial planning, reporting, man-
agement, and accounting systems is essential in tracking and managing this flow of revenues and
expenditures.
Financial planning means being prepared ahead of time for the flow of cash and other
resources into and out of your organization. The reason it is crucial to be prepared is that inflow-
ing and outflowing resources may not always be synched in the same schedule. Depending on
your industry and sources of revenue, resources might cycle into and out of your venture at dif-
ferent times. Knowing ahead of time when you’re expecting revenues and how much (whether
from funders or end users) and when you’re expecting to make payments (whether monthly
salaries, utilities, service costs, manufacturing costs) will help make sure you don’t run out of
resources.
Budgeting is a huge part of financial planning. Having annual forecasts is important not only
before you start but also for the duration of your venture’s life cycle. During the start-up phase,
you might be in the red, and that’s completely normal. It’s important for you to have a plan on how
you’re going to get yourself to the point where you’re finally financially sustainable. And when you
do get to that point, you may want to consider having reserves of financial resources on hand to
serve as a safety margin. Last but not least, financial planning is critical in helping you determine
your growth strategy. Expanding your operations can be a huge investment; sometimes it can feel
like being a start-up all over again!
Financial management entails a lot more than planning. It also entails the ongoing manage-
ment of resources, ensuring that all expenditures and revenues are accounted for and making sure
that your venture is abiding by legal requirements. On the accounting front, building systems
to facilitate the tracking of revenues and expenditures can be as simple as buying an accounting
software platform in which you can enter each item as it comes in or goes out. Some of the newer
software allow you to take photos of receipts from your phone and these are automatically entered
into a spreadsheet, which you can then manage.
It is highly advisable to have a specialized person take care of the accounting needs of your
organization. If you try to do everything on your own, it can not only overwhelm you and dis-
tract you from other components of your work, it also can result in less-than-optimal results and
hurt your social impact in the long run. Specialized accountants can be either outsourced (i.e.,
paid for a concrete task, without entering your payroll and becoming an employee in your orga-
nization) or as your venture grows, you can have one or more persons join the team to handle
your finances.
Financial management as a whole is not something you can do alone. Unless one of your
cofounding team members is specialized in this subject area and has previous experience, you are
putting yourself and your venture at a huge risk if you don’t hire, contract, or outsource this ser-
vice. Moreover, it can be quite time consuming. First, different funders and investors will have dif-
ferent reporting requirements. Second, as you grow, checks and balances will need to be put into
place to ensure that there is no room for corruption. Who is responsible for writing checks? Who
manages cash accounts and tracks receipts? How many signatories are there on your accounts?
These are all details you will have to keep in mind.
Last but not least, as your venture develops, your financial needs will change. The person who
will help you fill out that initial accounting software system is probably not the same person who
will help you broker high level deals with banks! Like everything else in your organization, your
financial systems and team will evolve over time.
Taxes
Taxes are a topic spanning multiple categories—financial health, reporting, legal requirements,
and registration options. As mentioned by Dr. Powers in the interview box, understanding the
tax requirements of different countries and different legal forms within each country will likely
be part of the decision you take on how to register. This underscores the importance of consulting
with legal experts at that stage of decision making. Once you register, staying on top of your tax
requirements takes on a whole new level. Not to mention, it affects your balance sheet and cash
flow. Managing all this is not something you can do alone, nor should you. It is time consum-
ing and requires you to stay up to date on tax law and other moving parts. Using a certified tax
specialist working closely with your accounting person or team is critical. This will not add a huge
expense to your annual budget and will be well worth the investment.
Reporting
Different legal registration forms have different implications for reporting requirements, with
charities and nonprofits often bound to stricter requirements than privately held for-profit busi-
nesses. However, regardless of your technical legal specification, as a social venture, it behooves
you to share information with the outside world, demonstrate transparency in your financial and
social inputs and outputs, and account for your activities and use of resources as they pertain to
fulfilling your social mission.
Many social ventures post their annual financial reports on their websites, to account for all
sources of revenue and funding, including trading activity and donations, as well as expenditures.
Social ventures also report their impact, not only for their own internal M&E purposes but also to
communicate to all stakeholders what they are doing and whether it is working. There are various
reporting frameworks that social ventures can use, and these can often be found online depending
on your industry and location. At the end of the day, it is not which reporting template you use
but rather the fact that you are holding yourself accountable to sharing your organization’s ins and
outs with the world that make you a stronger social venture.
Internal Governance
Regardless of the legal structure of your venture, it is important to have internal governance docu-
ments and guidelines. These outline the key principles, policies, and procedures that your venture
adheres to and holds everyone accountable to them. Chances are, in the past, you’ve been involved
in a volunteer group or student group at one point in your life. These groups have constitutions
that outline the make-up of the organization (officers), the decision-making processes (voting),
and the rules by which all members should abide (by-laws). Just like a nation has a constitution
that serves as the basis for policy-making and legislation, your organization also needs a constitu-
tion. It can be called “articles of association” or might have another name depending on the type
of organization and the country you’re operating in. The nomenclature is less important than the
basic principles, which require you and your founding team to lay the foundation for your orga-
nization’s growth and well-being.
Your business plan already contains a huge portion of the information required for your inter-
nal governance. It states what you’ll do with profits, describes your organization’s mission, and
lays out how all your work will reflect the mission. What remains to be added in your internal
governance documents are the rules and processes that will govern the execution of these guid-
ing principles. How will decisions be made? Is it just up to the founding members to decide what
is best for their organization? How will new people be hired and other resources be added and
procured—do they need to fit certain criteria?
Transparency is not one component to check off your list but rather a characteristic that is
engrained in all parts of your organization.
Transparency
Transparency refers to the flow of information both within the organization and in exchange with
the outside world. Transparency in decision making means that all stakeholders know in advance
what criteria are being used to make decisions, and by whom. Transparency in accounting means
that there is no hidden information on certain costs and revenues. Transparency is a value and an
approach that is applied across components of the organization: it is not one component to check
off your list but rather a characteristic that is engrained in all parts of your organization.
Accountability
Accountability within your organization refers to “who is in charge of what.” As a group, you are
all jointly accountable for working together to achieve the social outcomes you’ve set out to create
for your end users. Within the group, layers of accountability refer to the notion of having checks
and balances in the decision-making process. This means that there are ways of double check-
ing important decision points to make sure that they were made in accordance with the orga-
nization’s internal guidelines and having the ability to balance out one person’s viewpoints and
contributions—whether positive contributions or potential mistakes—to ensure that the organi-

zation is moving in the direction specified by its mission and its values.
Specific officers are responsible and accountable for specific tasks and outcomes. For example,
finance officers may be in charge of the organization’s budget. However, the chief executive is
also responsible and accountable for the outcome, and so is the board. If a budget officer makes
a mistake, he or she has to answer to it and is held accountable, but it is also the organization’s
leadership that takes responsibility. Ultimately, the team and its leadership are accountable to its
stakeholders and end users. But you’re also held accountable to each other, because at the end of
the day, you’re all bound to your mission, and your job is to get it done together.
Decision Making
Part of building a healthy organization is having clarity on key decisions that have to be made as
part of your process map and what the procedures for going about this decision-making process
are. In a small enterprise, the owner is free to make decisions as she or he pleases. In a clinical
setting, different decisions are made by different people—certain clinical decisions by physicians,
others by nurses, and others by administrators. Once you have fully developed your own organiza-
tion’s process map, you will have an idea of the main decisions that need to be made on a regular
basis in order to smoothly operate your venture. You and your team need to be in agreement on
who makes these decisions, what information is needed, who provides the information, and what
the key criteria are for making the decision. This is crucial to an efficient, effective, and transparent
organization. The board is usually responsible for making long-term, strategic decisions that can
affect the direction of the organization, along with the chief executive. But the information that
informs these decisions comes from the troops on the ground. Being clear on what steps must be
taken before a decision can be reached will help manage the process and the time frame.
Documenting Institutional Memory

Manuals
The internal governance documents (whether a constitution or other high-level document) refer to
the basic principles that guide an organization’s direction. But documentation and institutionaliza-
tion of the main practices involved in running the organization on a day-to-day basis are a whole
other beast. This is often managed by creating a set of manuals. Examples include operations manu-
als (there can be one or more depending on what the organizations’ operations are like), human
resources manuals (these include guidelines for hiring and firing as well as ongoing monitoring and
evaluation of human resources), and training manuals (how to go about preparing newcomers for
their roles—this can also be part of the human resources manual in some organization’s).
Just like a car comes with a manual, so does an organization!
Depending on what the organization’s operations are—what products or services are offered
and what the steps required to produce these are—there can be one or more operations manuals.
This is usually tied to the size of an organization. For example, procurement is sometimes consid-
ered part of operations. Procurement means the process of buying things that are needed for your
supply chain. In a small organization, procurement is one step that one person makes. In a large
organization, procurement might require an entire department! In this case, it would need its own
manual, while in the smaller organization, it would be mentioned in the overall process map, and
most likely, there would be one comprehensive manual. Similarly for human resources and train-
ing, these might fall under the same manual or be two (or more) separate manuals.
The goal of manuals is not to build bureaucracy and paperwork, but rather to provide written
documentation of guidelines and best practices. Just like a car comes with a manual, so does an
organization! You have put a lot of work into figuring out the best way to do things, and the next
step is for you to document them. Then, they can be revised and updated, and improved upon in
the future.
Policies and Procedures

Policies and procedures may be included in either the higher-level internal governance documents
or various other manuals, depending on the policy or the procedure in question. Sometimes, these
fall into a neat category: for example, we are all familiar with return policies that specify when a
purchased item can or cannot be returned from a retail store. This type of policy would be found
within an operations manual and would be accompanied by a set of procedures to operationalize
it and serve as guidelines for the person implementing and enforcing it. Child protection policies,
antidiscrimination policies, and antiterrorism policies often also fall underneath the umbrella
of operations but are more likely to be found as clauses within an organization’s basic articles of
association or other high-level documents because they apply to all components of your work.
Standard templates for these documents are available online and examples can be viewed by visit-
ing the website of any large, well-established organization and comparing a few. Spend some time
with your team thinking about how these basic principles and values can be incorporated into
various steps of your work to ensure that there is no room for unintentional adverse outcomes on
these fronts.
Depending on your line of work and the setting you’re working in, there may also be policies
and procedures that are required by law. Human resources is an example, to ensure that no one
is discriminated against. You may not be aware of all the nuances, so it’s important to get legal
advice while working on your organization’s policies and procedures. Sector-specific requirements
are also important, such as safety and hygiene checklists. As your organization grows, it’s critical
to ensure that you have a steady grasp on all requirements and, more importantly, that all incom-
ing staff members receive training on them.
The Board
Why You Need a Board
Having a board in place helps provide some of the checks and balances needed for a healthy orga-
nization and adds support to ensure that all its vital signs are stable and thriving. Different organi-
zations use different terminologies for their board depending on the type of organization and the
country in which it is registered; it can be referred to as the board of directors, board of trustees,
or board of governors. Regardless of its name, the board serves a central purpose, which is to
oversee the organization and ensure that it stays true to its mission, uses its resources ethically and
efficiently, maximizes its social impact, and follows sound practices in its policies and procedures.
Having a board in place is a legal requirement for any organization that is not privately owned,
whether it is for-profit or nonprofit.* Most funders and investors also require you to have a board,
and many also require you to give them a seat on the board. This is their way of ensuring that they
can be involved in the venture’s decision-making processes, directions, and outcomes. Regardless
of your legal registration and your funders’ requirements, it is your obligation as a social entre-
preneur to take the steps on your own to formalize the structure of your organization as a social
enterprise. These steps include creating internal governance documents that require a transparent
and participatory process for decision making, to ensure that all decisions are made to the benefit
of the target audience and are in line with the mission.
Note that the board of directors/governors/trustees is different from the board of advisors we
talked about in previous chapters. While the former are responsible for overseeing the direction of
the organization, its governance, and decision making, the latter serve as an additional volunteer
corps to share their technical expertise, social and professional networks, and other resources.
What to Look for in the Board

The board can be one of your greatest assets—and sometimes one of your greatest headaches!
Whether you are a for-profit or a nonprofit, the board can play a combination of roles. Board
members can support the chief executive in contributing diverse perspectives and in building
new relationships through their social networks and their leadership position in the field, in the
multiple sectors that they represent. Having board members from industry, from government,
from academia, from business, and from civil society will ensure that you are well represented in
different social and professional circles and that you benefit from different points of view when
making decisions for your organization. It will also help you benefit from the unique insights
and experiences offered by various fields of practice, and integrate best practice from different
fields of work.
As a starting point, you want to make sure that your board members have strong track records
in leading and governing organizations. Then, when you are thinking about recruiting board
members, ask yourself the following questions:
◾◾ Who do I want to find out about my work and join forces with me?
◾◾ What resources do I need to gain access to?
◾◾ What technical know-how do I need advice on?
◾◾ What skills or strategies would help me achieve my goals?
◾◾ What experiences or perspectives would complement my own and my team’s?
Then ask yourself where you can find those people who can help provide these needs and make
these links. Meet with business leaders, thought leaders, chambers of commerce, nonprofit orga-
nizations, think tanks, foundations, and government agencies. Start with your existing network
and build out from there. Your existing network includes classmates, colleagues, friends, family
members, and their networks (think outside your own generation). It includes your professors,
managers, mentors, parents, and their networks too. Start by meeting with people you think can
help, have specific questions prepared for them, and ask them who else they’d recommend you
meet with.
* http://corpgov.law.harvard.edu/2012/04/15/nonprofit-corporate-governance-the-boards-role/.
Building up to a board relationship takes time and care. Asking too many people to join
your board may make it difficult to manage. Moreover, it is important to ensure that board
members “play well” together. The last thing you want is for internal politics and power
dynamics to develop between your board members, which would interfere with their primary
task of supporting and ensuring good governance of your venture. Organize a series of meet-
ings between yourself and prospective board members, and between prospective board mem-
bers themselves before inviting each to join. This will have the double benefit of ensuring that
they feel engaged and giving you the opportunity to experience what it’s like to work with
them.
Like any role within your organization, write a job description for your board members.* This
is used for your reference, to help you think about what characteristics you are looking for in a
board member, and for their own reference, to be clear on what is expected. What are you ask-
ing for? Typical requests include attending a minimum number of board meetings per year (e.g.,
quarterly), organizing events to promote awareness about your work, and oftentimes also making
a financial contribution, although this is not necessarily always the case and can differ in different
countries.
Ultimately, the role of the board is to hold the chief executive accountable. All social entre-
preneurs, founders, and other leaders are held accountable to themselves and their teams because
they are the ones who set out to achieve their social mission in the first place; but having a body
of senior board members to answer to certainly helps to ensure that the risk of drifting from
the mission is mitigated, that other risks in general are mitigated by having people both to sup-
port you and to question you, and that all views and all potential pathways are explored rather
than relying on the judgment and the decision-making power of one person. Accountability
means that you have to answer to someone other than yourself. When you report to your board
on a regular basis, whether quarterly or annual or whatever schedule you agree on, you will be
grilled—they will ask you questions about what you have accomplished and what you have not,
why you made certain decisions, and what you intend to do moving forward. They will help you
set the bar high and at the same time be realistic. They will make you sweat, and they will make
the next board meeting loom like an ultimatum in the forefront of your mind. These are all good
things! Just like you study the most before a final exam, having a board to answer to will push
you harder.
One of the most important things to keep in mind is to look for diversity in a board. If you fill
it with members who have the same characteristics as yourself, you are not adding as much value to
your organization. Look for people who have something to offer you that you don’t already have.
Do they have experience to refer back to that will add to yours? Do they have knowledge and skill
sets that you don’t? Do they have contacts they can introduce you to? Think of your board as your
army; they are the people who will back you and your team members up.
Leadership beyond the Founders

The purpose of taking the steps recommended in this chapter—building systems, processes,
and people—is to set up your social venture in an organizational framework that can last
without you. As your venture grows, it needs to be tightly managed; this is where hiring the
right team members and having solid operational and governance systems and structures come
* Sample job descriptions can be found at www.bridgespan.org.

in. While you as the visionary behind the venture were a driving force in making it happen,
it’s your responsibility to set things up such that they can go on without you. Whether you
prefer to be out in the field interfacing with the customer or at the back end setting strategic
directions, or both, the everyday and every-year running of the organization cannot be man-
aged by you.
There is a whole field of writing about leadership versus management, and we will not go
into that here. Suffice it to say that leadership and management are two separate skill sets and
that both are required to grow an organization or initiative. Leadership skills and behaviors are
those that focus on setting the vision and garnering support from stakeholders, both within
and external to your own team. Management skills and behaviors are those that focus on pro-
ducing the measurable outputs and the resulting social impact and financial growth systemati-
cally over time. These are not mutually exclusive but can be found and fostered in each one of
us.

The goal of this chapter is to make sure you set strong foundations for a healthy organization. Your
first goal is for this organization to flourish and thrive and for all its vital signs to remain stable as
you roll out operations and start growing so that the structure will be strong enough to withstand
pressure. Then, once you’ve demonstrated that it’s a stable healthy organism, you can start think-
ing about growth. In the coming chapters, we’ll talk about options for growth and how to expand
your impact. But first, it’s important that you be able to demonstrate your impact and demonstrate
that you’re a viable organization.
Exercise: Reflections
1. Is it possible for you to carry out your work within the umbrella of an existing organization?
Is it absolutely necessary for you to start your own organization from scratch to do this work?
What are the pros and cons of each?
2. Look up the legal registration options available to you in the country you’re working in.
What advantages and disadvantages does each confer to you? Would you benefit from reg-
istering in more than one country?
3. If you have decided to register a new organization and have chosen your registration form,
look up the legal requirements specific to this type of organization. What are the taxation
and reporting requirements? What are the industry-specific standards you need to be aware
of?
4. If you were a doctor diagnosing the health of your venture, how would you score your-
self? Which of the vital signs and systems we discussed in this chapter do you have under
control; which are flourishing, which need strengthening, and which are nonexistent? Put
together a work plan for yourself: list the steps you need to take and a timeline for each
step.
5. Write out a job description for your board members. What would you need from them?
What do you want them to hold you accountable for? Make a list of your “dream team”
board members. Who are the first five people you will invite, and what is your action plan
to recruit them?
CHAPTER SUMMARY
◾◾ Starting a new organization is not a given. In many cases, you can achieve your goals
by working with others and skip the headache and the overhead of running an orga-
nization. Make sure you’ve explored this option and considered potential partnerships
before you open up your own shop!
◾◾ If you do need to start your own organization, weigh the pros and cons of differ-
ent legal registration forms in your country. Talk to more than one lawyer; get a
second and third opinion. Registration options specific to social enterprises are rare
in most countries, and you’ll have to start with the existing legal structures. Learn
how they affect what you’re allowed to do, how you’re allowed to grow, and your tax
requirements.
◾◾ An organization is a living, breathing organism with several crucial systems working
together to keep it all going. Take the time and care to assemble these systems into a
healthy structure, since it is the body that will carry you forward in the journey ahead.
◾◾ Make sure you know what vital signs will tell you how each system is functioning
and what back-up structures you can build to support the smooth functioning of each
system. These include financial systems, governance, legal and tax, human resources,
and accounting systems, and many others.
◾◾ One of these structures is a board. Boards require careful management—be strategic
about who you invite to serve on your board, what you expect from them, what you
want them to hold you accountable for, and how you’ll go about managing these
expectations.
Company profile: Riders for Health, www.riders.org.

Founded in 1989, social enterprise registered as charity in England and Wales, US 501(c)3
nonprofit organization, country programs registered as local NGOs.
Product/service: Helps to make sure all health workers in Africa have access to reliable,
well-maintained transportation so that they can provide regular health care to the most
isolated of peoples.
Goal: Strengthen rural health systems and truly achieve equitable healthcare in Sub-Sahara
Africa by providing transportation and logistical assistance.
How it works: Riders for Health manages and maintains motorcycles, ambulances, and
other four-wheeled vehicles used in the delivery of health care across seven countries in
Africa. By focusing on the “last mile,” they ensure health care truly reaches the most iso-
lated. They partner with ministries of health, NGOs and community-based organizations
to maximize the local impact and charge those partners a not-for-profit fee to secure their
own sustainable progression. They also build on local capacity by providing training and
employment opportunities on preventive vehicle maintenance. The emphasis is to educate
and communicate that keeping a vehicle running efficiently over time is often more cost
effective than repairing one that has broken down completely. Riders for Health are cur-
rently ensuring that 21.5 million people in Africa can be reached with reliable health care.
Company Profile: Embrace, www.embraceglobal.org, www.embraceinnovations.com.

Founded in 2008, Hybrid Model: US 501c3 and for-profit United States, India.
Product/service: Infant warmer to help save the lives of low birth weight and premature
infants in conjunction with education programs to help address the root causes of neonatal
hypothermia.
Goal: Advance maternal and child health by delivering innovative solutions to the world’s
most vulnerable populations.
How it works: Embrace Global forms partnerships with clinics, governments and NGOs
in areas were low-birth-weight and premature infants occur in high volumes. They donate
warmers to under-resourced communities, and provide training on hypothermia and care for
under-weight infants, at each program site. Embrace Innovations is a VC-backed company
that is responsible for product innovation, manufacturing, and sales and marketing. They sell
products through channel partners to both private hospitals and governments in developing
countries at scale. Revenues are also augmented through a branded consumer product e-tailed
in the US. Embrace Innovations sells units to Embrace Global at a guaranteed best price for
programs, and pays a royalty for every unit sold otherwise.
Company profile: Groupe SOS, www.groupe-sos.org.

Founded in 1984, French nonprofit “Association Loi 1901.”
Product/service: A group of multiple social ventures providing social services and job
opportunities in the fields of youth, employment, health, solidarity, and seniors.
Goal: To fight against social exclusion.
How it works: Groupe SOS has incorporated numerous social ventures over 30 years in
above five programmatic areas. Examples include nursing centers, retirement homes, chil-
dren’s centers; social business serving those in transition from addictions, homelessness, and
other challenges; production units and various service businesses run by those with handi-
caps or disabilities. Operating in 20 countries, the group includes 300 different structures
and serves over 1 million people each year. A central innovation is the sharing of resources
across these structures to professionalize their activities, pool their expenses, and develop
synergies to maximize social outcomes.
Chapter 12
Communications
Communicating Your Venture

Communications are integral part of your organizational development and have already been an
integral part of your work from day 1. Communications means a lot more than pitching and
networking—it also means creating feedback loops, finding ways to keep listening to your stake-
holders, and influencing others. Communications includes the exchange of information within
your team, other stakeholders, and most importantly your end user!
Social entrepreneurs are often intimidated by this aspect of their work. But what they don’t
realize is that they have already done it in so many ways, shapes, and forms! Co-creating your
solution is a form of communication itself, requiring the exchange of information in multiple
directions. Listening can be one of the most important parts of communicating. Brainstorming
with your team and developing your first few prototypes also involved another form of commu-
nication to exchange and catalyze ideas. Testing your prototypes then required getting feedback
from your end users, again, giving them something to react to and listening to their responses. So,
you are already pretty good at this communications stuff. Don’t forget that! Because with the gift
of confidence and the art of listening, you are already halfway there.
Communicating your impact and deciding on what metrics you’ll use to capture and convey
that impact are also key components of your communications strategy. How will you make sure
that everyone (including your end users, yourself, your funders and other stakeholders) knows
exactly what your impact is? The metrics you set in Chapter 7 are communications tools in and of
themselves! Writing a business plan—no matter what length, shape, or form you decide to make
it—is a form of written communication. It requires you to organize your thoughts and structure
and convey them clearly. The business plan is intended for your own benefit, to provide a blueprint
for your work, but it will also be shared with your team, your potential successors, and various
supporters along the way, whether funders or board members. As we’ve seen, sharing it with
others can take place in different ways, depending on with whom, where, how, and why you are
sharing it.
In this chapter, we’ll discuss the different components of a communications strategy and make
sure that you’re using your resources wisely in conveying the right information, to the right people,
in the most effective way, and at the most effective time.
233
What Are the Different Components in Your Communications?

Let’s take a moment to step back and think about the various players we need to exchange infor-
mation with and the different approaches and skill sets needed to communicate with each one.
Like everything you do, your communications are strategic. That is, you set a goal and use com-
munications as a tool to reach that goal. Before you start, think about the outcome you’re aiming
for, for each one. Let’s explore the different categories of audiences we might need to communi-
cate, and the different purposes for which we’re communicating with each one.
The “Who” and the “Why”

Communicating with Your End Users—Selling Your Product or Service
You’ve already been communicating with your end users to develop your product or service. Now,
how are you going to sell it? How do you get the word out? How will you compete with all the
other products and services that various end users are spending their attention, time, and money
on? This involves specialized marketing skills, which include branding, messaging, and advertis-
ing. We’ll delve into these more deeply when we get into the “what” and the “how” further in the
chapter.
Also, once you do attract a customer, how do you keep them? How do you ensure that your
customer service and feedback systems and protocols make your end users feel they’re being heard?
Future iterations of your product or service, adding new products or services to your offerings
down the line, and ensuring that your team is constantly responsive to your end users’ needs and
can convey them to your management and other stakeholders are all part of communicating with
your end users. Thus, this is a two-way exchange of information: both getting the word out and
listening to others.
Communicating Internally—Information Flow within Your Team

Internal communications is also an essential component of getting your job done right and mak-
ing progress toward your mission and goals. Internal communications can take place within team
members horizontally and can take place vertically in terms of providing feedback from manage-
ment to the frontline and vice versa, providing information to the board of directors, and making
decisions.
How can you ensure that information is exchanged across all the different lines that make
up your workforce? Recruiting, hiring, and training team members involve a certain form of
communication to help convey your mission and ensure that your values and vision are inter-
nalized by each person. As your team grows, other forms of communication become essential.
Communicating from the frontlines to the management is essential to ensure that the customer’s
voice is heard and that all decisions are made with the customer’s best interest in mind. This means
that the people providing the product or service to the end user (those at the frontline) need to
have a way to get information to the people making strategic decisions and garnering resources
to build the venture (those in executive positions). Conversely, the executive team members need
to make it part of their job to solicit information and feedback from the frontline when making
decisions.
Keep in mind that the number 1 experts are the end users and that those directly interacting
with the end users have the largest opportunity to understand their needs and preferences. The
Communications ◾ 235
role of the management is to gather, synthesize, and analyze information about what the end users
want and need—not to make their own decisions based on their own opinions and assumptions.
The least “social” your venture can be is to have a setup where decision makers spend their time
sitting in the board room discussing among themselves and exchanging their own opinions and
making decisions accordingly. It is crucial to be evidence based all the way, and it is everyone’s job
to gather this evidence. Everyone has a role to play. The most strategic approach you can take is
to build feedback systems in your organization so that information flows from the end user to the
decision maker, and not the other way around.
How to do this? To make sure that your team members are empowered to share their own feed-
back as well as feedback they have received from end users, open channels of communication need
to be built into your organization from the start. This can be achieved through regular meetings,
events, and surveys to make sure that everyone has a voice. Comment boxes, online forms, random
samples, and other data collection vehicles can help make sure you are able to reap this valuable
information within your organization as it grows. Even the layout of your office can impact the
exchange of information! Open spaces, shared facilities, and other design aspects can help people
interact more regularly, and this can be extremely valuable not only in exchanging feedback but
also in sparking new ideas!
Most organizations have an annual review whereby employees are evaluated: there are two oppor-
tunities to improve upon this process. The first is to increase the frequency; for example, conduct
these reviews quarterly. They don’t have to be elaborate or time-consuming, it’s just an opportunity
for people to share feedback. The second is to make them 360° reviews, which means that everyone
is given the opportunity to review others and the review doesn’t only happen from the top down.
Communicating with Stakeholders—Reporting Back

Traditionally, in commerce, reporting to shareholders has meant conveying information on your
financial performance, which is the bottom line that you are accountable to them for. In a social
venture, your stakeholders are not necessarily people who hold a share in your company and are
positioned to benefit financially from it. The financials are secondary to your stakeholders. You
want the world to know your social impact because everyone who has supported you along the
way has done so in order to reach the social outcomes and end goals you have set out to achieve.
Thus, reporting back to funders and other supporters involves tracking your impact using the
metrics you’ve identified in Chapter 7 and also conveying to them the voices of your end users,
which are harder to capture using statistics. Make it personal. Don’t forget that your supporters
include all the stakeholders who made your work possible from the start.
Remember, the word stakeholder literally means anyone who has a stake in your venture: when
you first set out to co-create your venture, you met with local leaders, most likely including local
government, potential opponents, and various parties. These are people you need to continue to
communicate with along the way.
Reporting on your impact, your progress, your successes, and your lessons learned is key. Let
people know what’s working, and let them know what you could still use their help with! This is
the best way to keep people engaged. Support is not something you get once at the start; it’s some-
thing you need to keep garnering throughout your journey.
Be very clear on all evidence and data gathered. Reporting is an opportunity for you to not
just show off your successes but also share with the world the valuable information you’ve collected
along the way. This will cause a ripple effect, whereby your work will influence the work of oth-
ers. This ripple effect is something that has to happen consciously. Think about how you can get
information out there that you want others to adopt and propagate, and message it accordingly.
This in and of itself will have a huge social impact!
Think about how you can get information out there that you want others to adopt and
propagate.
Communicating Externally—Advocating and Spreading Your Impact

Beyond communicating the work itself to those who have a direct interaction with it, as part of
achieving your mission, you’ll most likely need to exchange information with people who can
influence the field you are working in. Your collaborators, supporters, partners, suppliers, team
members, and end users are already part of your value chain. But what about those who influence
your work by making (or blocking) policies that affect your ability to reach your target audience?
Thinking back to Chapter 2, we talked about identifying the various pathways and root causes that
affect the social and environmental challenges we face. These are complex, and you can’t tackle them all
in your work. But there are a multitude of opportunities that you can look for—and that you can create
together with others in your value chain—to influence the social, environmental, political, and eco-
nomic determinants that underlie, propagate, mediate, or block these pathways. There is a much wider
audience to your communications strategy than you may at first think. This includes lobby groups that
can work for or against your cause, policy institutes and think tanks, politicians, advocates, and others.
As with all other audiences in your communications strategy, the flow of information needs to
go in more than one direction. What information do you need to get to these people and parties?
And what information do you need to get from them? Pay attention to what they are saying and
doing at all times because these will influence your work and your ability to reach your goals. And
you may have the opportunity to influence them in return; this is why this target audience is an
important part of your communications strategy that cannot be overlooked.
Building a Goal-Oriented Communications Plan

As you can see from the previous discussion, everything you do, say, and share is with a goal in
mind. This is why we talk about building a communications strategy. Your communications can-
not be ad hoc and sporadic. It needs to be well studied and well thought out, planned in advance,
and crafted with specific objectives in mind, just like everything else you do!
This is why each target audience mentioned above has been listed according to why you are try-
ing to reach them. If your goal is to sell the product or service, you are trying to reach the prospec-
tive end user. If your goal is to spread the word about the importance of the social outcome you
are working toward, you are targeting other stakeholders and decision makers who can influence
policy and other determinants of social infrastructures and outcomes. Other goals include keeping
your team well informed so that they feel a sense of ownership and buy-in toward the processes
(how we do things) and the outcomes (what we’re trying to achieve) and receiving their input
and feedback in order to improve both your processes and outcomes in return. Reporting back
to existing supporters and managing relationships with prospective supporters—or even trickier
relationships such as those who stand against you—are all separate objectives with separate target
audiences. Thus, we need to craft different contents for each one: this is where the “what” aspect
of your communications strategy comes in.
Interview Box. Laila Iskandar, Cofounder, Mokattam School

and A.P.E. Rug Weaving Center (former); Minister of Urban
Renewal and Informal Settlements, Egypt (current)*
TC: Laila, you’ve played many roles over the past 30 years. How
did your work evolve from the grassroots level to the policy-
making level?*
LI: The work itself hasn’t changed, but what’s evolved has been
the awareness and contribution of multiple players over mul-
tiple sectors. The challenge was to build the quality and the
business model. The rag pickers I started working with in the
early 1980s were already there doing work long before they
formed a social enterprise. Multiple stakeholders were mobi-
lized to support the “learn and earn” rug weaving center cre-
ated with the Association for the Protection of the Environment. Later, we formed the
Mokattam School with the NGO Spirit of Youth through my consulting firm CID,
partnering with multinational companies. This required not only obvious barriers such
as raising capital but less obvious barriers such as convincing people of the added value!
TC: How did you go about messaging for different stakeholders, from multinational com-
panies to government representatives and policymakers?
LI: They key is to get people to see past the end of their nose. Many stakeholders in differ-
ent sectors had a myopic view of what an added value would look like for them. They
only wanted quick solutions. The key is to demonstrate that some solutions might
need more investment but would bring greater value to them, alongside others. Most
people won’t work with you just to help others or to help the environment. It has to
have an added benefit for them too.
TC: What advice do you have for social entrepreneurs on where to focus their communications?
LI: Build quality in your work before you approach stakeholders. Careful monitoring
and evaluation of results is needed. There is a huge potential to create solutions with
multiple benefits for multiple stakeholders, if entrepreneurs can bring the different
ingredients together. The different resources are already there; they just need to be
mobilized and well managed. It takes an entrepreneur to catalyze. But more than
that, we need to break silos and see things through a social lens. We need to re-define
what business and profit looks like. If it’s not social, it’s not sustainable.
Photo Source: https://www.flickr.com/photos/foreignoffice/9136952666. Open license under

creative commons.
* At the time of writing (previously Minister of Environment).
The “What”
Exploring your objectives and your target audiences is only the first step in building your com-
munications strategy. The next step is to figure out the message you need to convey to each one.
Just like you’ve tailored your solution and its delivery and pricing around your end user,
you’ll also need to craft tailored messages to each stakeholder.
Messaging
We’ve already seen that there are many different stakeholders who form a part of our multi
dimensional marketing strategy. We have to position ourselves for collaborators to understand our
added value, in addition to our customers. Just like you’ve tailored your solution and its delivery
and pricing around your end user, you’ll also need to craft tailored messages to each stakeholder.
The trick is to maintain clarity, be concise, be compelling, and be consistent. There’s a fine line
between tailoring your message to effectively get your message across to different stakeholders and
maintaining integrity to your core story. Let’s talk about some of the important things to keep in
mind while crafting each message.
What Action Do You Want Each Audience to Take?

The information you present to each audience needs to be packaged in a way that will get across
the key message that you’re looking to convey that will result in the actions you would like them
to take. For end users, you want them to buy your product or service. For your internal team, you
want them to own and inform the process and the results. For other stakeholders, you want them
to understand why it is that what you do is so important and how they can support you.
What’s in It for Them?

Your messaging is based on your value proposition to each audience. What will the end user get
out of this? Why should your team do what it is they’re doing, to help get the results you’re look-
ing for? What do other stakeholders have to gain if you achieve your social mission—what is their
vested interest? Understanding the motivations, needs, and preferences of each party is a key infor-
mant to your messaging, so it’s important that you dig back to the information you gathered and
the analysis you conducted during the co-creation process and throughout your journey.
Stakeholder Ladder
In the world of marketing, a common concept is the stakeholder ladder: this suggests that each
target audience will follow multiple steps after they are exposed to your message (Figure 12.1).
First, they will be suspicious. “What is this new idea? Why should I adopt it?” they might be ask-
ing themselves. If you get the messaging right, they will become prospects. Hmm, they might start
thinking, this sounds like it might be interesting to me or benefit me in some way. Once you nail
down your marketing, they will become sold on it. For the end user, this is when they become a
customer. But this is not where it ends!
Follow-Up
To get them to come back, you need ongoing communication—and it has to be tailored to repeat
customers, who require different messaging than prospective customers. Once you can get them to
Advocate
Inspire
Engaged
Captivate
Testing
Convince
Prospective
Inform
Suspicious
Attract
Figure 12.1 Stakeholder ladder.
come back repeatedly, they become clients. And if you can keep your clients satisfied—more than
satisfied, delighted—they become advocates and get others to join as well.
This applies not only to end users but to other stakeholders as well. After the suspicious and
prospective stages, they test out your ideas and then become fully engaged. The important thing
to keep in mind is that your communication strategy needs to incorporate tailored messaging and
timing for each of the previous stages.
Multidimensional Messaging
A tool to help you organize your messaging is shown in Figure 12.2.* Here, you list all your dif-
ferent audiences and then create multiple columns for each: Attract, Inform, Convince, Captivate,
Inspire. What does it take to grab the person’s attention? Where do they read, watch, shop, buy,
listen, go? Then, what information do you need to provide to them? Write down at least one key
* Check out this valuable resource and others at www.enterprisingnonprofits.ca.
Who/Why Attract Inform Convince Captivate Inspire!

What
End users
Internal team
Existing
stakeholders
(reporting)
Prospective
stakeholders
(advocating)
Figure 12.2 Multidimensional messaging.

Inspired by the Messaging Matrix of the Social Enterprise Marketing Toolkit, with many thanks!
message that this audience needs to know about your product. It most likely will not be a descrip-
tion of your product but rather a description of how it can change their lives for the better. Again,
this is where the importance of understanding each target audience comes back. What do they
aspire to? One frequently emphasized social marketing tip is to appeal to people’s emotions. How
do they want to feel? This is how you’ll attract and retain them as long-term stakeholders! Don’t
describe the features of your product. Do show how it will make that person’s life easier, happier,
better.
The “How”
Okay, so we’ve talked about who we’re targeting and what we need to do to build the right. But
how will we get these messages across to them? Here, we need to talk about the different com-
munications channels.
The “who” and the “why” will determine the “what,” which will then help you decide how
you are going to get your message across. You have many options, and in most cases, you’ll end
up using a variety of different communications channels, which we refer to as the media mix. The
medium is the vehicle or channel through which you get your message to your target audience.
Examples include the following:
◾◾ Social media: These include your website, Facebook page, Twitter account, and other social
media.
◾◾ Multimedia and interactive media: Videos and other audiovisual content, usually posted
through your social media, can also be on more traditional media such as the television.
◾◾ Publications: These include both print and online publications. Print publications include
brochures, which are still very important. These explain what you do, how you do it, and
how people can get involved (either as an end user or other stakeholder). Other publications
include reports, research, thought leadership, articles, and blogs.
◾◾ Mailing lists: Maintaining an updated and active mailing list is a must, and this usually
includes both electronic and paper mail.
◾◾ Face time: You also have to just get out there and talk to people. This can take place through
conferences or other events, through smaller group meetings, and through one-on-one
meetings.
◾◾ Surveys and feedback forms: Some communications channels are specialized in getting
information in as opposed to out. This is how you build systems to help make sure you keep
listening and responding to your customers and other stakeholders. Nothing beats face time,
but you can’t meet with everyone, so these other forms of gathering input are needed.
What you should know about each one of the above communications channels:
Social Media
Social media can be tricky because it can just as easily work against you as it can work for you.
Marketing gurus always point to the importance of carefully managing your content and think-
ing about unintended consequences of everything you put out there for the whole world to see.
The crowd can go either way! Social media is not something you should be doing yourself. When
you first start, the cofounders may well be posting their first few updates. But as you grow, as soon
as possible, it is critical to get someone specialized in social media to join your team. This person
can be part time, or a consultant, or might even be a volunteer. They need to have specific skills to
achieve specific outputs, such as the following:
◾◾ Grow your number of followers and likes.

◾◾ Respond to both positive and negative feedback.
◾◾ Strategically post content for various target audiences, to get them to move up the stake-
holder ladder.
◾◾ Collect and synthesize real time information, updates, and photos from the field, co-creating
the content with the people who matter the most!
◾◾ Manage and balance the different types of information and the different sources and make
sure that all your social media are “synched” in terms of being regularly updated and consis-
tent with each other yet complementary rather than repetitive.
These require specialized skills and social media can be challenging to maintain and manage,
so make sure you’ve got someone supporting you on this! One of the trickiest things about social
media is how rapidly it is evolving. While this book might refer to Facebook, Twitter, Instagram,
and other forms of social media, by the time it is published and you read it, these might be out-
dated, and there will be others grabbing people’s attention! So make sure you have the capacity you
need to stay up to speed on social media.
Multimedia and Interactive Media

Short videos are a powerful way to get your message across and can often be part of your social
media strategy. Podcasts, whether audio or audiovisual, are another medium that you can leverage.
Conducting interviews on television and posting videos from the field online are also examples of
leveraging multimedia. Again, it is important to have specialist guidance in creating and dissemi-
nating these materials. Incorporating the most effective music, messaging, length, and punch line
requires a special talent and skill set!
Your website is one of the most powerful communication channels you might come across. All
other channels will point to your website. People will search for you online and visit your website
when they hear about you. So make sure it is interactive. Your website cannot read like a brochure! It
needs to have updates from the field, blogs from your team and end users if possible, photos, videos,
testimonials, news updates, thought leadership, research, and publications. Ideally, you might want
to have a live chat function so that people can make inquiries and receive responses in real-time.
Someone on your team needs to be in charge of maintaining your website at all times. Most likely,
this will be your social media person to start. As you grow, you may likely have more than one person
involved in communications. Ideally, you’d like to have a communications strategist thinking about
what needs to get out there, to whom, and why. This person can then be supported by one or more
team members who are in charge of implementation—posting, updating, and making sure that
everyone is kept up to speed.
Publications
As part of making your media mix interactive, you need a publication plan. First, make sure you
have a good old fashioned brochure to put in people’s hands. Some people just need to have some-
thing printed that they can hold in their hands! Your brochure should be simple and streamlined
and include specific examples of what you offer—like a menu—but not too crammed with infor-
mation. It needs to contain contact information and “action points” that people can take if they
want to get involved, whether as an end user, supporter, advocate, supplier, or other form of
stakeholder.
Then, start thinking about what else you can publish. You are out there on the cutting edge of
the field, generating new ideas and finding new ways of doing things. This is called thought leader-
ship. While your work most certainly speaks for itself, you have an opportunity to create a ripple
effect not only through your own work but also by informing and inspiring the work of others.
Sharing blog posts from the field, discussing what you are struggling with, what works, and what
doesn’t, is as important as the more official quarterly or annual reports you release. Publishing
articles on your website, on other websites, and in journals is another way to get information out
there, although this requires more work and careful review. This is another point when it becomes
crucial to have a communications strategist supporting you. Publications will always remain out
While your work most certainly speaks for itself, you have an opportunity to create a ripple
effect not only through your own work but also by informing and inspiring the work of
others.
there for everyone to read, so another pair of discerning eyes is a must.
Mailing Lists
Yup, mailing lists are old school, but they still work! If someone sees a post from you out there on
social media, an interview on TV, and a video online, those are all great—but it’s not the same as
seeing your name in their inbox. Both electronic and print newsletters could be helpful to convey
information and to give people a sense of being part of your community, depending on the setting
you’re operating in. Three important points to keep in mind here are that it’s important not to
overdo it (neither in the frequency of mail-outs nor in the content included), that timing is every-
thing, and that an action item is required.
Annual, biannual, or at most quarterly mail-outs are advised. In very rare cases are monthly
mail-outs advisable. Or, mail-outs can be scheduled according to special events and calendar
dates that are specific to your work. Examples are holidays and subject-specific days when the
international community focuses on one topic such as earth day, children’s day, women’s day, etc.*
If you’re starting a new phase of growth or reaching a new milestone, then this could also be a
strategic time for a mail-out, especially when fundraising needs are anticipated.
In terms of content, keep it simple and catchy. A photo is a must. Bold points of the key mes-
sages are highly recommended. Last but not least, give people an action item. Whether it’s buying
Positive reinforcement is an effective route to getting and keeping people engaged.
* A list including these and many more can be found at http://www.un.org/en/sections/observances/international-days/.

something, donating, sharing with friends, attending an event, taking a survey, let people know
what they can do to help. Thanking them for their support (even if they haven’t given it yet!) is
always recommended—positive reinforcement is an effective route to getting and keeping people
engaged.
Face Time
No, we’re not talking about the iPhone app. We’re talking about good old-fashioned handshakes
and looking people in the eyes. You’ve got to pound the pavement! Speaking at or attending con-
ferences and other events, organizing smaller group meetings such as panels or round tables, and
proactively scheduling one-on-one meetings are all part of your communications strategy.
Matching this and following up on this with other channels of communication is a must.
E-mailing people after you meet with them, sending them newsletters (whether electronic or
print), sending them free samples, inviting them out to the field…these are all examples of ways
to engage people, retain their attention, and build their level of interest over time, until they are
committed supporters.
Interpersonal interaction is one of the most important channels of communication, and
although it takes the most time, it is part of what makes your venture a social venture: interacting
not only with prospective supporters but also with your end users. As your organization grows,
make sure you still find the time to get back to where it all started—with your end users. Spending
Creating that experience for others is also an effective way to garner support.
Rather than telling stakeholders about your work, show it to them.
time with the people you’re serving is one of the most important parts of any communications
strategy.
Creating that experience for others is also an effective way to garner support. Rather than tell-
ing stakeholders about your work, show it to them. Videos are great, but if you can get someone
out to the frontline, do it.
In other situations, it might help to bring people together to discuss your work. Creating your
own conferences, workshops, round tables, fundraisers, or other events is part of your communica-
tions channels and these are different ways of reaching and interacting with different stakeholders.
Just make sure to keep in mind the objectives you’ve set—these will drive the time, resources, and
content you put into each interaction.
Surveys and Feedback Forms

While nothing can replace face time, it is impossible to meet with each and every stakeholder. This
is why it’s crucial to create systems to gather feedback to complement interpersonal interaction.
Simple tools you can use to invite input from your end users, supporters, or other stakeholders
include surveys and feedback forms. These can be disseminated online or in print. Your M&E
team will play a crucial role in developing and implementing this part of your communications
strategy.
Evaluate Your Communications

Just like every other component of your social venture, your communications need to be evalu-
ated. What are the intermediate indicators that you’re trying to reach? How is each one tied to
your end goal, the social outcome you’re working to change? Are you trying to get more followers
and likes on social media as an indicator that you’re increasing awareness of your work? And what
is your target—how many followers and likes, and by when? In most cases, your targets will stem
directly from your market research, for example, building on the potential first-time customers
and repeat customers you’re aiming for. Make sure to check in regularly to evaluate the outcomes
of your various communications messages and media. Setting targets as part of your communica-
tions strategy will help you track and evaluate your progress. If you are putting a lot of time and
paying someone a lot of money to work on something but it’s not getting the results you need to
help you meet the objectives you set, then maybe you need to rethink it!
Over time, each social venture will gather its own communications data to learn what works
best for its topic, audiences, and objectives. Throwing an annual event might work for one organi-
Whatever setting you’re working in, don’t try to import ideas from the outside. Look around
you and see where people spend their time, money, and attention.
zation, while sending letters in the mail might work better for another. This is why it’s important
to set objectives for your communications strategy—why are you communicating with each target
audience, what do you need them to do in order for you to reach your ultimate goals—so that you
can go back and measure progress toward those objectives and determine whether you’re going
about reaching them in the most effective ways.
Different Strategies Needed for Different Settings

Reaching audiences in an urban setting is completely different from reaching audiences in a rural
setting. In the first, most people are overstimulated and constantly bombarded with information,
and it’s hard to get their attention! They’re also more likely to use electronic resources rather than
print. In the second, you may experience completely different challenges. It might be really hard
to get the word out!
It also varies by culture and by parts of the world. One social enterprise started printing its ads
Get to know what people believe in and what they trust, and make sure your product or
service, and the messaging and branding that goes with it, embodies those values.
on calendars and distributing the calendars when they found out that people in their community
loved calendars! Another used a traditional troubadour to help spread the word. Yet others used
outdoor events, plays, and music to reach their end users.
Whatever setting you’re working in, don’t try to import ideas from the outside. Look around
you and see where people spend their time, money, and attention. What brands are considered
desirable? Get to know what people believe in and what they trust and make sure your product or
service, and the messaging and branding that goes with it, embodies those values.
Different Skills Needed for Different Stages

As you’ve probably noticed by now, communications are not something you can execute on your
own! You need to hire skilled talent that will differ for each component of your strategy. The first
step is developing that strategy! One of the most valuable investments you can make is to work
with someone specialized in developing communications strategies. This is the CCO we talked
about in Chapter 6. If you don’t have that person or that skill set on your founding team, you
might want to consider working with a consultant.
Once you’ve developed the strategy, you’ll also need specialized support to implement it effec-
tively. When you’re first starting, it’s a good idea to outsource specific tasks or deliverables on a
part-time or consulting basis to people specialized in each need. As you grow, you may want to
start considering hiring specialized officers, but keep in mind that it’s not every person that can
have all the different skills required for the various components of communications.
Skills needed can be divided by communications channels and by communications goals. As
we’ve seen, different communication channels include social media, awareness campaigns, events,
individualized/tailorized outreach efforts, short films, and physical advertising products. Different
communications goals include building awareness, gaining customers, securing stakeholder col-
laboration, fundraising, advocating for policy changes, or internal exchange of information. And
the latter can be for multiple purposes too, ranging from training to internal coordination for
operations, to M&E, financial/social/environmental assessment, etc. The person who is going to
get your number of Twitter followers up from 1,000 to 10,000 is not the same as the person who is
going to organize a gala dinner to raise a six-digit sum of money—and this in turn is not the same
as the person who is going to produce a short and catchy film for crowdfunding!
You will need these various skill sets at different points along your journey. This is why it’s
important to have a well thought-out communications strategy and work plan, to know what
action is needed and when, for you to reach your goals.
Social entrepreneurs and founders can be thought of as “evangelists” promoting their cause,*
and part of the communications strategy entails developing a work plan to conduct meetings with
high-impact individuals and institutions who can help further the cause. But the founding team
can’t be everywhere at the same time and have other functions to fulfill in addition to rallying
support for their venture. This is why it’s so important to invest time and money in recruiting and
retaining top talent to help develop and implement your communications strategy.
Most social entrepreneurs are focused on the social change they’re working to produce and
don’t have the skills needed for branding and communications: you need to entrust yourself to a
skilled professional for communications, just like you have for legal advice, financial management,
accounting, and other components you may not necessarily be specialized in. Many design firms
can manage the entire branding process for you, from the identity (name and logo) to the website,
letterhead, brochures, business cards, etc. Some specialized firms offer discounted rates for social
entrepreneurs, and some might even do it at no charge, what we refer to as pro bono. Others might
* http://www.ssireview.org/articles/entry/freeing_the_social_entrepreneur.
hold “Brandathons,” where they offer start-up organizations an opportunity to compete for their
services for free. In most cases, you’ll be able to secure discounted or volunteered resources, but
even if you aren’t able to, this is one of the best investments you can make.
Tips and Pointers across Audiences, Media, and Messages
Most of the people you’re trying to get any message out to don’t have the full picture the way
you do—any information you share with them is simply a snapshot that they ingest and try
to build a picture around.
Be Positive
Key tips from the marketing world are to always keep it aspirational and tell a story. People
are more likely to respond to positive inspirational stories that make them feel that change is
possible, rather than depressing news. Sounding an alarm will be less likely to invoke action
than sending out a well thought-out, positive message. Think about how you would respond to
a headline reading “Climate change is out of control!” compared with a headline reading “Did
you know that by following these simple steps you can make a huge difference?” While the first
is alarming, the second is calming. The first evokes a negative feeling; the second evokes a posi-
tive feeling. Rather than feeling anxiety, a sense of foreboding, perhaps even irritation and anger
at the state of the world today, the recipient feels empowered to do something about it.
Be Thoughtful
One of the main reasons underlying the importance of developing a communications strategy is
the importance about being very careful about what you communicate and to whom and when.
Social media is not the only mode of communication that can turn against you!
Most of the people you’re trying to get any message out to don’t have the full picture the way
you do. Any information you share with them is simply a snapshot that they ingest and try to build
a picture around. So you need to be very, very careful about how you present information, how you
create context, and how you preempt any misunderstandings or miscommunication.
This is another opportunity for you to co-create communications materials with your stake-
holders. What do your end users have to say? What do your teammates have to say? What do other
stakeholders have to say, and what do they think about the content you have drafted? Bounce your
ideas off people, take suggestions, run any messages or materials by multiple audiences, and test
them out—like everything else that you do!
Keep It Personal
Another pointer is to focus on a person and tell his or her story. While numbers are absolutely
critical in helping you to formulate your solution, sometimes they can feel overwhelming to others
when you issue a call for action. If a person is told that millions of children are dying before the
age of five, they will more likely than not feel extremely depressed, hopeless, and frustrated. But if
they are told that a child named Maya who lives in a town named Victoria survived to celebrate her
fifth birthday because of your work, they are more likely to become supporters. People don’t like
People are already bombarded with so much information that they are constantly screening
things out. So keep it simple—otherwise you might just get screened out.
feeling down! They might even start avoiding you and ignoring your calls for help. So tell them
what they can do to help, and make them feel great about it! This applies to your team members,
your end users, and people you are trying to rally for support.
Keep It Simple
This is a tip you have heard before: less is more! Don’t bombard people with information. This
applies both to the frequency and content of your communications. Of course, this varies across
communications channels and across audiences as well. An obvious example is the frequency of
social media posts, which can be multiple times per day, versus mail-outs, which can be a couple
of times a year.
When in doubt, go back to the key messages from your matrix in Figure 12.2. What are the
top one to three messages that you want people to retain? Adding more information might pre-
vent them from focusing on the most important points you want them to think about. People are
already bombarded with so much information that they are constantly screening things out. So
keep it simple; otherwise, you might just get screened out.
You always still need to think about what key messages you want your audience to retain,
without exception.
One exception might be internal communications, where the value of transparency and a
participatory approach could indicate that the opposite could be true at times. This is important
to build a sense of ownership and buy-in across the team, all the way up to the board. Still, even
in such scenarios, it’s important that information is carefully curated and presented in a way
that meets your objectives. You always still need to think about what key messages you want
your audience to retain, without exception. A great way to balance this out is to offer more
detailed information (such as the raw data) in a separate channel (like an appendix, a separate
file, or a detailed report that can be downloaded separately) and focus on highlighting the key
messages more proactively. Passive versus active recipients are important to think about here.
For passive recipients, highlight key messages. For active recipients, make more information
available.
Evoke Emotion
Many of you know the famous quote by the author Maya Angelou, who said, “People will
never forget the way you made them feel.” Information is easily forgotten. Data, statistics,
facts, and figures are hard to retain and remember. But emotion is something that stays with
us. Inspiring people, making them feel hope, making them feel useful, that they are making a
difference are the best ways you can get them involved. Whether you are thinking about gar-
nering support or selling your product or service, ask yourself this question: How do people
want to feel?
Most people just want to feel happy. If they feel that your product or service will generate
happiness for them and their loved ones, then you are connecting it to the most basic need of the
human race. And that is what social entrepreneurship is all about.
Summary and Conclusions

Your communications strategy determines what, why, when, how, and to whom you exchange
information (Box 12.1). Writing your business plan and sharing it with others are part of your
communications strategy! Co-creating with the community in a constant and evolving way and
gathering feedback from end users and teammates and other stakeholders in your value chain
are all also part of your communications strategy! Presenting your work to potential supporters,
opponents, or the general public is something that you are now starting to do after these previous
preliminary stages. So make sure you have the right communications team to help you do this in
a goal-oriented, effective manner.
There are a wealth of resources specialized in communications and marketing that you can
refer to for more information. To prevent you from being overwhelmed by everything a quick
Internet search will have to offer, a few favorites are shared in Box 12.2. These have been selected
because they are fun, simple, to the point, and largely tailored for social entrepreneurs (Box 12.2).
The goal of this chapter is not to make you a messaging expert but rather to make sure you’re aware
of the different forms of communications you need to think about and the different skills needed.
No chapter—and no book for that matter—could possibly teach you all the communications
skills you need for every communication function! And you shouldn’t be the one doing all this on
your own in the first place. For now, use the framework described in this chapter to help you get
started in building your communications platform and team.
Exercise: Your Communications Strategy

Use the framework in Box 12.1 to outline your communication strategy:
1. For what purposes do you need to exchange information with the outside world and within
your venture? List the different objectives of your communications.
2. For each objective, list the audience. Who do you need to exchange information with to
reach this objective?
3. For each audience group, what are the key messages you need to get across? List one to two
key messages for each audience group.
BOX 12.1 WHAT DOES A COMMUNICATIONS STRATEGY LOOK LIKE?

1. Objectives—the “why?”
Why do we need this information to be exchanged? What are we hoping to accomplish?
2. Audiences—the “who?”
Who are the different stakeholders we need to exchange information with?
3. Messaging—the “what?”
What are the key messages we need to reach each audience for our objectives?
4. Media mix—the “how?”
How are we going to get these messages across? This includes timing—the “when”
Cross-cutting guidelines: create feedback loops so that the exchange of information flows
in, out, within, and across your social venture. This includes evaluating the implementation
and results of your communications strategy and whether it is helping you achieve your
goals.
BOX 12.2 RECOMMENDED RESOURCES—A FEW FAVORITES

Marketing strategy:
“Marketing for Social Entrepreneurs: A How-To Guide” by UnLtd* (see p. 5 for more
resources)
“Social Enterprise Marketing Toolkit,” with video modules and downloadable worksheets†
“The Universal Marketing Structure”‡
Social media tips:
Five tips for social entrepreneurs, from a team member of Ashoka Changemakers§
Measuring benefits from social media¶
Tips for nonprofits (applicable to for-profits too!)**
Bonus: Pitching and presenting:
http://www.sethgodin.com/freeprize/reallybad-1.pdf
http://unreasonable.is/your-elevator-pitch-is-way-too-long
http://women2.com/2014/07/16/10-tips-5-million-dollar-demo-day-pitch-google/
* http://www.setoolbelt.org/system/files/resources/marketing_1934.pdf.
† http://www.socialenterprisecanada.ca/en/toolkits/strengtheningtoolkit/nav/Marketing.html.
‡ http://www.huffingtonpost.com/ira-kalb/marketing-the-missing-ing_b_6973658.html.
§ http://www.theguardian.com/social-enterprise-network/small-business-blog/2013/may/23/social
-media-five-lessons-entrepreneurs.
¶ https://hootsuite.com/resources/white-paper/8-tips-for-social-business (note: this is not an endorsement
of Hootsuite).
** http://www.nten.org/article/21-social-media-tips-for-nonprofits/.
CHAPTER SUMMARY
◾◾ As a living, breathing organism, your social venture has various communication needs.
Exchanging information with your end users, internal team, suppliers, supporters, and
other stakeholders takes place at various points in your life cycle and operational cycle,
using multiple modes of communication.
◾◾ As a strategic social entrepreneur, you need to develop a proactive communications
plan. This includes identifying the different purposes and objectives you aim to reach
with these exchanges of information. Why are they needed, and who are the different
audiences for each one? What are the different messages needed for each audience to
achieve each objective? How and when will you get these messages across?
◾◾ Messaging is tailored to each audience within each objective. The same audience might
have different messages tailored to them at different stages of your relationship. This
is how people move up the stakeholder ladder and become drivers of success for your
venture. This applies to everyone who is already in your value chain and to those who
are not yet but whom you are aspiring to work with.
◾◾ A combination of different communication channels is needed to convey these dif-
ferent messages at different points in time. Depending on the media mix and skills
required, you’ll need different team members to help build and implement your
strategy.
◾◾ General rules of thumb across messages and channels are to focus and tailor your mes-
sages, keep it simple, keep it personal, and evoke emotion. Combine the power of data
with the power of the human story. If you can make people feel that they can be part
of creating positive change, then you will be well on your way to reaching your goals.
4. Now step back and assess whether the same audience group has been listed multiple times
Company profile: A.P.E. Rug Weaving Center, www.ape-egypt.com.

Product/service: Hand-loom rugs and patchwork items created by recycled textiles.
Goal: Provide learning opportunities in conjunction with earning opportunities to women
who were not able to complete school because they left to work the garbage route in
Mokattam “garbage village” in Cairo, Egypt.
How it works: Built as a project within the Association for the Protection of the Environment
in Egypt, the Rug Weaving Center was funded by profits from a predecessor composting
project. Partnering with the private textile sector in Egypt to secure rags, the project trains
mothers in creating high-quality marketable products, alongside literacy classes, health
awareness training, and empowerment to deal with culture-specific matters such as female
circumcision, early marriage, and others. Trainees graduate and go on to produce from their
homes.
in your previous outline. Extract the key messages you are trying to get across to them. Are
there any missing pieces in your messaging for each audience group? Review Figures 12.1
and 12.2 to determine whether your strategy is complete for each audience.
Company profile: Spirit of Youth, http://soyzabaleen.blogspot.com.

Product/service: Education and livelihood opportunities for youth garbage recyclers in
Cairo, Egypt.
Goal: Educate marginalized youth to earn income and improve their environment through
playing constructive roles in their communities.
How it works: Founded by several sons and daughters of garbage collectors in the same gar-
bage city as Kamel’s rug weaving center, Spirit of Youth is an NGO that has formed numer-
ous collecting companies through strategic partnerships with other recycling communities
in Greater Cairo. The NGO works with youth recyclers to provide certified literacy training
and has recently launched an e-waste recycling venture providing computer assembly and
repair using electronic waste. The recycling school was established by CID Consulting four
years before Spirit of Youth NGO was established. It was housed in an existing NGO in
2000 then moved to Spirit of Youth in 2004. It was designed around the recovery of sham-
poo containers that were refilled in the fraudulent low income popular markets.
5. How will you get the message across at each stage? List the different channels and media mix
for each message. Indicate the timing and frequency of each: when and how often will you
deploy each message?
6. Once you have evaluated your messaging needs and channels for each audience, go back and
reorganize them chronologically. Make a work plan for each month, by week. Who will be
responsible for implementing different parts of the work plan?

Chapter 13
Managing Growth
Once you have set up a healthy organization and feel confident about its vital signs, you can start
thinking about taking the next step and pushing your impact further. Now, we enter the growth
stage. Growing your impact means graduating from your initial piloting and launching stages;
scaling your operations, your volume, and your reach; and more importantly reaching beyond the
confines of your own operations to build strategic partnerships with others, to collectively trans-
form together the face of the social challenge you set out to change.
PART ONE: ACHIEVING SCALE

Dimensions of Growth
The first dimension of growth is scaling your existing operations. Let’s say you reached 100 people
in your pilot. What happens next? You may have set ambitious targets for yourself while planning
your venture, but what considerations do you need to be aware of when the time comes to imple-
ment your growth plan?
Growing your impact is not always as simple as increasing your level of activity to reach
more people. First, the increase in activity is not always linear in proportion to the increase in
impact. For example, hiring a new person or opening a new point of service does not mean you
will provide the exact same number of products or services as did the last person you hired or
the last point of service you opened. Second, there are so many directions you can grow in. This
could mean expanding your geographic scope (reaching different places) or expanding your demo-
graphic scope (reaching different people), both of which will expand your breadth of impact. It
could also mean expanding the range of your products and services, which could expand the depth
of impact (Box 13.1).
Third, moving beyond these dimensions, you will most likely wish to consider expanding
outside your own venture. This means partnering with others, thinking about ways in which your
work and your goals can influence different stakeholders, and maybe even venturing to tackle
some of the different pathways or root causes related to the challenge you are addressing. Creating
networks to lobby or advocate for social policy is an example of expanding your impact outside
your own venture. These are all considered different dimensions of growing your impact.
255
BOX 13.1 WHAT DOES IT MEAN TO GROW YOUR SOCIAL VENTURE?

Expanding your venture can happen in different ways:
◾◾ Increasing the number of people you reach.

◾◾ Increasing the impact you have on each person you reach.
◾◾ Increasing the scope of your social impact, beyond your direct end users.
Expanding the breadth and depth of your services can happen through multiple pathways:
◾◾ Increasing your market share in your existing market.

◾◾ Adding new products or services for your existing customers.
◾◾ Entering new markets, whether new geographies or new target populations.
How to determine which pathways are right for you:
◾◾ Collecting feedback from your existing customers and other stakeholders.

◾◾ Surveying the market of customers you have not reached yet.
◾◾ Testing out different options through small pilots, just like when you first started.
Things to watch out for when planning and measuring growth:
◾◾ Growing your inputs and operations does not necessarily equate with growing your
impact.
◾◾ Growing too fast can sometimes put the quality of your work at risk, resulting in long-
term reductions in overall impact.
◾◾ Growing too soon can strain your resources and decrease your chances of success.
Just like your pilot was based on an evidence-informed solution, so should your steps toward
growth be based on evidence. When you were designing your solution, you looked into all the dif-
ferent pathways and factors related to the challenge you’re tackling and its root causes. By collect-
ing information and by co-creating with your community, you made a conscious decision about
which aspects you could tackle most effectively and focused on those. The same applies to growth.
Trying to do too much, too soon, or stepping on the gas pedal without a well-thought-out strategy
may strain your resources or cause you to grow in the wrong direction. Revisiting your mission
and your theory of change, examining your internal organizational and operational vital statistics,
and consulting with your team and your board and other external stakeholders are all steps that
you need to take at this point in time and on an ongoing basis in the future.
Let’s start with the first dimension first: scaling your operations.
Scaling Your Operations—What to Assess

Scaling your operations means producing more of your product or service, which you’ve already
demonstrated to have a measurable social impact. The goal here is to reach more people and have
a larger cumulative impact. At what stage are you ready for scale? You’ll need to have prelimi-
nary data on your social impact and demonstrate financial viability with respect to your business
Managing Growth ◾ 257
model. You’ll need to have charted out the technical and marketing skills required to cope with
the needs of expansion and set in place a team and a plan to meet those human resource require-
ments. You’ll need to have conducted sufficient market research to develop an evidence-based
marketing plan, which may hold different insights from your pre-launch marketing plan now that
you’ve collected data from your own customers. Growing too soon can be detrimental to your
venture, if you haven’t built the tools and muscles needed to carry it out.
Here is one of the key points in the life of your venture when you will reap the rewards of
data collection. You have been gathering two main types of data: (1) social impact metrics and
(2) organizational and operational performance metrics. Both types of data will tell you whether
and to what degree you have been succeeding in meeting your internal targets and your stake-
holders’ needs. The second will also tell you how your organization’s vital statistics are doing and
whether its systems are running smoothly, in order to withstand growth.
What is the rate of growth of your customer base? This can be calculated by plotting the number
of people you have served over time. By now, you might have automated software, databases, or data
analytics to help you do this, but even if you don’t, this is one example of a very basic and easily acces-
sible statistic. As an example, a low-cost way of assessing your growth to date is to maintain a spread-
sheet. You can choose your time units by specifying days, months, or quarters (during the start-up
stages, it’s not recommended to use time units larger than that, but you can most certainly use
smaller time units such as hours and then aggregate or add them up). These are usually listed in the
first column of the spreadsheet. In the adjacent columns, you can list the information you’ve collected
about your end users. Sometimes, this can be detailed information, such as in the case of a health
venture, whereby name, age, gender, personal details, education, occupation, income, insurance, and
address details may be collected. At the other extreme, it may be simply a count of the number of
users. Scanning a large amount of information visually is difficult and the patterns or trends may not
immediately stand out to you. Plotting functions are available in the most basic spreadsheet software
and allow you to chart the data points on an axis, for example, with time on the x-axis and number
of end users on the y-axis. This will allow you to assess trends over time (Figure 13.1).
Has your user base been growing at a steady rate? Has the growth tapered or increased? Were
there any dips or peaks, and what could you hypothesize were behind these (seasonal changes,
End users
Months
Figure 13.1 Example of a chart plotting growth over time.

changes in your staff, external influences or newly implemented policies and procedures)? What
is the overall length of time you are assessing here? If it’s two months, it’s not likely you’ll be able
to draw any conclusions to inform your starting point for growth. If it’s two years, then it’s more
likely these trends will be able to inform your growth decisions.
What other information have you been collecting? There’s a huge difference between assessing
total customers and breaking it down into new and returning customers. Were your returning
customers asking for more products or services, were they returning for maintenance on existing
products purchased, were they following up with positive results or negative results?
Revisiting your process map is a key step in preparation for scale. Are there any steps being
taken that have not been included in the process map? Examine each step being taken in your
organization and ask yourself: is this needed? If no, how can it be eliminated or automated? If
yes, how can it be incorporated into a system, to standardize it across sites and staff? One of the
components that benefits the most from standardization is the M&E. The success metrics that you
collect, how and who collects them, serve as a carrot that drives the behavior and performance of
each site and each subteam, so make sure you’ve got the golden standard for these!
Examine each step being taken in your organization and ask yourself: is this needed? If no,
how can it be eliminated or automated?
Most importantly, what do the results say about social impact? The number of people reached
doesn’t necessarily signify that you’ve achieved the desired impact. They simply reflect the growth
trend. You’ll also need to evaluate the success metrics you set when you designed your logic model
or other blueprint for operationalizing your theory of change. Do the data indicate that the desired
outcome was achieved for each end user? For example, tracking the number of patients present-
ing at your community health center does not necessarily indicate that health outcomes have
improved, unless you have the evidence to demonstrate it.
The number of people reached doesn’t necessarily signify that you’ve achieved the desired
impact. They simply reflect the growth trend.
Growth patterns and related outcomes are objective, usually quantitative measures that can
inform your decision to scale your operations. Next, look into the qualitative measures. Talk to
your team. What has been their experience? Do they feel that the infrastructure is in place to allow
them to take on a larger volume? Have they experienced a need to increase the range of products or
services or to expand the same core offering to different geographic places, or perhaps to different
target audiences? You are not able to interface with each end user, nor to experience every aspect
and element of running your venture, and you are not able to make decisions on scaling alone.
Scaling Inputs versus Outputs versus Impact

What does it mean to design for scale? As we saw in Chapter 4, part of what it means to design for
scale is that you’ve created a product or service, and a set of processes and mechanisms by which it’s
delivered to the end user, that you can then expand on to reach as many end users as possible. In
Scenario 2
Social impact
Scenario 1
Scenario 3
Scale of operations
Figure 13.2 Example growth scenarios.
order to scale, the organization needs a strong logistical structure that can carry the added demand
of delivering more impact. There are a couple of different ways in which growth can play out for
your venture in terms of impact delivered versus resources needed (Figure 13.2).
The first route happens when a social entrepreneur is not able to design for scale. In this sce-
nario, the ratio of resources to impact remains constant as the venture grows. That is, the venture is
not able to reach economies of scale. This doesn’t mean you can’t scale; it just means the resources
you put in will remain proportional to the social impact you get out. You don’t gain economies of
scale by growing, but you can still grow if you have the resources.
The second route happens when the venture is designed such that the amount of input does not
increase proportionally to the amount of output. That is, the marginal amount of input required
to produce more impact decreases as you grow. This is called achieving economies of scale. The
more people you serve, the less it costs per person. This is ideal for growing your impact! Most of
the social entrepreneurs we met over the course of this book relied on economies of scale to reach
both their social impact targets and their financial viability targets.
There is also a third scenario, which can happen if you’re not able to scale effectively. In this
scenario, the burden on the organization actually increases per unit output as you grow. This could
happen if you grow into new markets—whether geographic or demographic—where your model
is less effective. It could also happen if you grow too soon and don’t have the sufficient processes
and human resources and as a result you end up losing time and money to fix it. In order to avoid
this ad hoc emergency type of situation, let’s make sure that you spend enough time, thought, and
resources in preparing for expansion (Box 13.2).
What we have learned above is that elements of success in expanding the operational aspects
of scaling your growth include the following:
◾◾ Designing a scalable product or service

◾◾ Building the processes and capacities to deliver on a large sale
◾◾ Strategically planning expansion to increase the chances of success
There are two nuances in these. The first is that the relationship of input and output does not
always stay the same as you grow. Ideally, you would like it to decrease. The second is that the
BOX 13.2 INFORMATION NEEDED BEFORE

YOU CAN SCALE YOUR OPERATIONS
◾◾ Is your organization financially viable? Has your pilot indicated that costs and rev-
enues are trending in accordance with your initial financial projections?
◾◾ Has your social impact been demonstrated? Have the results from your initial M&E
met the social impact targets you set before launching?
◾◾ What does the feedback collected from your initial customers indicate? Is there
demand for, and satisfaction with, the product or service you’re offering?
◾◾ Have you collected data on potential customers outside your initial pilot? You need
evidence to inform piloting your product at the next site.
◾◾ What will be the technical and managerial inputs required to scale? What physical
and financial resources are required? Do you have these resources?
◾◾ What strains will this place on your venture, and what investments do you need to
make upfront to ensure that your organization can handle these strains?
◾◾ Have you considered the risks of expansion? Are there different PESTEL consider-
ations in your new market? What steps can you take to address these threats and
mitigate risk?
◾◾ Also consider what new assets might be available to you at your new sites of operations.
Revisit, continue, and build on your initial co-creation process at each step of expan-
sion. This is the number 1 investment you can make that will help ensure your success.
relationship between output and impact may not always stay the same either. Even if you’re able to
produce the outputs necessary to deliver your product or service, it may not have the same effect
in different places and different populations.
Chart out your best-case, worst-case, and medium-case scenario. Ask yourself what it would
take to get to each of those places. What does success look like, and what would failure look like?
What are some different ways that you could fail? You did this already at the first design stages—
conducting a premortem—the opposite of a postmortem! Next, ask yourself what you and your
team are capable of and willing to do. What would it take to make you do more (or less) than you
are aiming for right now? What is your limiting factor in scaling? Is it supply, is it demand, is it
logistics? How will you address it?
Gathering New Information and Innovation as You Grow

Whatever options you choose for your growth strategy, one part of the template that should be
included for any strategy is gathering new information and innovations as you grow. For one, each
new site or market or product or service is a source of information to help you assess performance,
impact, and potential for further growth. Second, there will be many unexpected twists in the
plot as it unfolds, and these will allow you to glean invaluable insight to improve your product or
service, your processes, value chain, and needs for next steps. A growing organization is, after all, a
snapshot of increasingly larger pilots, in the sense that you are creating something new every step
of the way. As your experiment matures, your knowledge will catch up to your unknowns, but
each new phase will present new unknowns and new opportunities for both success and failure.
Listen to your customers, and this may mean potentially delegating more resources for feedback
and signaling in your organization, to compensate for the growing distance between you and the
frontline.
A growing organization is, after all, a snapshot of increasingly larger pilots, in the sense that
you are creating something new every step of the way.
How can this information be used to drive new innovations within your organization, ways of
doing things better? Are there feedback loops from different sites, teams, product lines, internally
versus externally facing components? Size can be an advantage from the point of view of econo-
mies of scale and of number of people reached, but it can also present disadvantages from the point
of view of ease of information flow and innovation.
Giving due time and attention to data—whether positive or negative—is your biggest
weapon as you grow.
Disadvantages and Tradeoffs

While growing your operations may allow you to reach more people, some of the steps you’ve
taken to get there may have placed a ceiling on the extent to which you can impact each person
you reach. Standardization, automation, and expansion of products, services, and processes can
sometimes make it harder to increase the depth of impact. What can you do to counter this? Just
like your growth package may have some standardized components that will be replicated across
sites, you can also factor in some local, tailored, or flexible components. Which parts do you want
to leave up to the manual, and which parts do you want to leave up to your local team, providers,
clients, and other stakeholders? Leaving a margin of flexibility will allow your venture to adapt to
the local context—in effect, it allows local market forces to shape your work and your impact on
top of the larger trends that you’re counting on to grow.
Managing this margin of flexibility may be as simple as conducting regular calls with site man-
agers or product managers, having a reporting system that allows space for local innovations to be
shared, or bringing together teams from different parts of your enterprise in an annual gathering
like a conference. Having a rewards system to recognize innovations that increase your impact
will help to both identify and encourage them, allowing you to maintain a culture of innovation
beyond your initial founding or piloting teams.
Threats of Expansion
Expansion presents an opportunity, and it also presents a set of threats. It has the potential to
make you stronger by creating economies of scale, building your team, increasing your evidence
base, and strengthening your impact. It also has the potential to lead you off track, presenting
the risk of bureaucracies, inefficiencies, and increased distance between the management and the
frontline. While the founders and executive team are often the most glorified in any venture, it
behooves you to think of your foot soldiers as the most valuable members of your team because
they are the closest to your end users. They have the best access to data and it is through them that
you will implement any changes you make in response to the data. They are the ones providing the
product or service and in many cases also collecting customer feedback. These are the community
health workers, the teachers, the sales representatives, and the field coordinators. As you grow,
more distance is created between you and them.
When the team first starts out small, each person is responsible for multiple tasks. As you
grow and division of labor occurs, some team members become specialized in outward-facing
tasks, others in decision making, and yet others in roles such as budgeting and planning. It is up
to you to make sure that as these various roles are introduced into your venture, this doesn’t have
unintended consequences that may adversely affect your social impact. These may include delays
in responding to customer feedback, disproportional time spent on processes not directly linked
to outcomes, and loss of the voice of the foot soldier.*
Is It Possible to Outgrow Your Mission?

When your product or service becomes valuable to a target audience that was not your originally
intended audience, or in a mechanism that was not what you’d originally designed, one possible
consequence of growing in that new direction is that it may distract you from your mission.
Another possible consequence is that it may add to your mission and impact. Your first impulse
will be to protect your mission, which is perfectly normal and most of the time recommended. But
don’t close your eyes to opportunities that may add to your mission and to your social impact. Not
every expansion is necessarily a threat to reaching your goals.
Nobody will argue that staying focused on your path is a key to success. Some people refer
to this as “putting on your horse blinders” or “keeping your head down,” meaning that it’s
crucial to avoid distractions and stay focused on your path. And while it is true that focus is
critical to success in any venture, it’s also true that once in a while, it’s important to take those
blinders off and look around you. While it may feel at the time that the last thing you need
is a new idea to consider, and you already have your plate full, don’t discard unforeseen or
unexpected opportunities for expansion without considering them and bringing them to your
team’s attention.
Don’t forget, you aren’t making these decisions alone. You have the support of your board,
advisors, staff, and network. Most importantly, you have the voices of your customer. You’ve
developed this from the start along with these and other stakeholders, and making this decision is
one more step in the process that you will take together. It’s important to look inside yourself and
determine how you feel about this, and at the same time, it’s important to be open to what oth-
ers have to say and how they look at it, even if that means stepping outside of your comfort zone.
Ultimately, it’s the end users who decide. If there is a pull in a certain direction from the end user,
then this is the direction you will be assessing.
Disclaimer
Many people in the social entrepreneurship ecosystem talk about scaling as the number 1 most
important factor in determining whether social entrepreneurs are making a measurable difference
in our world. While scaling is in fact the determining factor in creating a large magnitude of social
impact, that is not to discard the importance of small social ventures that make a transformative
* http://www.bain.com/publications/articles/founders-mentality-westward-winds.aspx.
difference to a specific community that could not otherwise have been reached by a scalable ven-
ture. Yes, if we can design solutions for scale, then we can reach the billions of people affected by
social and environmental challenges today. However, each situation is different, and some situa-
tions might only be solved by designing a very specific and very tailored solution that might not
be the most scalable.
There Is No Black and White

Like everything else in social entrepreneurship, this is not a black or white issue. In some cases, a
social venture may be designed for scale and may be replicated or expanded to reach millions. In
other cases, it may be more tailored to a specific community with specific needs. And, in many
other cases, it may be something in between.
Identifying what parts of your model are scalable and what parts aren’t can help determine
where on this spectrum your social venture lies. In many cases, the core elements in your approach
could be applied to different settings, while leaving room to adapt other elements to the local
context.
PART TWO: BEYOND SCALE

What Does It Mean to Reach Your Goals?
Don’t confuse scaling with reaching your goals. Was your original goal to scale as much as pos-
sible? Or was it to reach as many people as possible within a certain hard-to-reach population? In
some cases, scaling means leveraging market forces to reach as many people as possible. But in
many cases, in social entrepreneurship, it might mean something very different.
If your goal is to reach the most underserved communities, then you might not be able to
get there using existing market forces. The existing market forces might take you somewhere big,
allowing you to reach a very large number of people, this is true. But just make sure, are these the
people you set out to reach when you first approached your social challenge? If yes, then great! You
have found it.
If no, then don’t despair, there are still other ways to reach your goals. They just involve the
same skills you used at the beginning while developing your venture. Listen. Test. Deliver. Listen.
Test. Deliver.
There is nothing wrong with leveraging market forces to reach as many people as possible; this
is a good thing, as long as you don’t forget about the people you set out to reach. It is them you
are working for. If your product or service is in demand by others too, then great! Use that. It can
fuel your efforts to reach the most difficult and challenging populations that haven’t been reached
before. There is a reason they haven’t been reached. This is because the market as it functions today
has failed them. So what you need to do is create a new market. And it’s not likely that it will be
a one-size-fits-all market that can reach billions of people. You need to listen, test, and deliver in
each market (Figure 13.3).
That is not to say that you can’t modify and replicate to reach diverse populations; this is
strongly recommended. The important point to understand here is that market forces as they cur-
rently function might sometimes take you in a very different direction than where you set out to
go, and you owe it to your own mission and your original target audience to deliver to them. You
will come across huge challenges in financing, distribution, and reaching the last mile. That is why
Listen
Deliver Test
Figure 13.3 The iterative cycle of working to reach your goals.
these challenges exist in the first place, and don’t forget that you took it upon yourself to tackle
them! It can be done, as others have demonstrated before.
As Muhammad Yunus mentioned in his Chapter 8 interview, selling out to large multination-
als might help you scale, but only if they adopt a new approach to reach your target population—
otherwise, they would have been reaching them long before you came along! You have the power
and the leverage to make sure this happens. Your goal is not to cash in on your product the way
a commercial entrepreneur would. That is the simple difference between commercial and social
entrepreneurs. Reaching only a part of your target population, and then moving on to answer the
call of the market, is not enough. This is where the market failed before.
Go to them.
Don’t Get Swept Away

As the Aravind case in Chapter 6 illustrated, it is often our tendency to draw conclusions about
why things haven’t worked. There must be something wrong with the target population. They
don’t want our product or service. They don’t know it will improve their lives and don’t have
the decision-making capacity to follow through. These are some of the learning objectives of the
Aravind case as taught by business schools around the world initially. How can we improve the
marketing of Aravind to better convince people to take up this service? The rural poor need special
marketing; that’s the best way to reach them.
In the end, it turned out that Aravind’s team had dropped the ball, in Thulsi’s own words.
They weren’t listening. They weren’t getting out there to where their target audience was and doing
things on their terms.
Reverse the Tide: Changing the Way Business Is Done

Have you ever read about those environmentalists who keep saying that their dream is for every-
thing not to be green? The point they are trying to make is that the mere fact we are using this
Building new
frameworks
Changing
patterns
Expanding
service
Figure 13.4 Expanding beyond your venture.
word to describe something that is “green” means that it stands out from other things that are
not green. Ultimately, we would like “green” to be the standard, so that this terminology becomes
obsolete.
Same thing with social entrepreneurship. Our goal is not to differentiate between social and
commercial entrepreneurship. The dream is for there to be no distinction so that the term social
entrepreneurship ceases to exist. Building business for marginalized communities is not what we
want to be doing because we don’t want for there to be any marginalized communities.
In both cases, for both the green and the social, this requires behavior change. It requires exist-
ing companies to alter their way of thinking and their standards. And it requires governments and
the citizen sector to push for that from both sides.
Changing the Field You’re Playing In

As every single social entrepreneur interviewed in this book emphasized, you can’t do it alone. This
is where you need to step outside your own venture and work at multiple levels (Figure 13.4). If
existing policies, legal frameworks, spending patterns, consumer behaviors, attitudes, and priori-
ties are propagating the social challenge you’re tackling, then these need to change. No matter
how innovative and effective your product or service is, you need to look outside your venture to
change your field.
If existing policies, legal frameworks, spending patterns, consumer behaviors, attitudes, and
priorities are propagating the social challenge you’re tackling, then these need to change.
Expanding Your Scope of Impact

Growing the scope of your impact is not something that has to happen within the confines of your
venture. Let’s venture outside the borders of your product or service for a moment. Think about
the PESTEL factors you assessed while building your venture: the political, economic, social,
technological, environmental, and legal barriers and opportunities. How have you built your ven-
ture to work within their context, and how have you in turn shaped these factors?
Growing your social venture’s “footprint” happens at multiple levels (Figure 13.5). Delivering
your solution will always be at the core of your work, but you can also change the way people
interact with the social challenge you’re tackling at other levels. Building awareness, advocacy, and
Start here Challenge
Incorporate local
How to engage Learning about new
Co-creating the differences in
local communities environment and contexts and testing
solution
as you grow? stakeholders? the market
Designing, Which Retest for various Develop new products

prototyping, characteristics will markets or services?
testing be retained?
Measuring social Interfacing with Getting to the last Setting targets and
impact your user mile/distribution standardizing metrics,
Delivering
data collection, analysis
Business model Adapting pricing/ Funding options Revenues from growth—

and funding marketing aspects for growth How do these affect the
operating model?
Organizational Standardize and Expand team, Assuring operational

aspects refine processes tools, capacity performance and quality
Communications Communicating Reaching different end users,

for scale and different stakeholders,
in different places
Evolution How have the

How has the Collaborating with others;
stakeholders and
challenge changed lobbying, advocating,
environment
over time? creating knowledge
changed?
Creating new patterns of

behavior, trends, building
the infrastructure of the
future
Where do you want to reach?
Figure 13.5 Continuum of growth.
policies are a whole other ballgame, and guess what—you are now a key player. Influencing the
mobilization of resources, the collaboration within and across sectors, and getting others to step
up and accept responsibility for social challenges is all part and parcel of your work.
Seeing the Forest from the Trees

There’s only so much impact you can reach by growing inside your venture—you alone are not
going to be able to reach the entire spectrum of change that you are aspiring toward. The first step
toward collective impact is stepping back and inviting others into your dashboard. By now, you
might have really gotten sucked into the nuts and bolts of your own social venture! Now that you’ve
grown it, let’s take a step back and look at the big picture once again, right where we first started.
This textbook has encouraged you to build your venture from the very root of the challenge.
Now that you’re well on your way, how can you zoom out from the grassroots perspective to see
the forest from the trees? Are there ways for you to combine your view with that of other social
entrepreneurs working in a focused and steadfast way on their own initiatives? If you can step back
and exchange perspectives, together, we can build a wider lens that might allow for a multiplica-
tive, rather than an additive, effect of all our positive actions.
Inside vs. Outside Your Venture

So in thinking about reaching your goals, it’s not enough to question whether you’re reaching your
target population, it’s only the first step. What you can accomplish alone is most likely a drop in
the ocean compared with what you can accomplish with others. You may be saying, “But I have
already engaged external stakeholders at every step of the way in developing and implementing my
venture.” This is true, but now it is time to think beyond your venture. What can you do beyond
the activities listed in the previous sections? How can the cumulative impact of your work and the
work of others be multiplicative rather than additive? To completely transform the challenges you
are tackling, you need to step outside of your own venture.
To completely transform the challenges you are tackling, you need to step outside of your
own venture.
This may sound counterintuitive or tricky, but in fact, it is something you’ve been thinking
about since you first characterized your problem, formulated your solution, laid out your mission
and vision, and tested your theory of change. You’ve recognized that there are multiple pathways
to reach the ultimate social outcome you are envisioning and that the product or service you are
providing is only one small part of the solution to what is most likely a very multifaceted chal-
lenge. How can you expand your impact as it pertains to the other pathways?
Mechanisms for Expanding beyond Your Venture

There are many different ways that this can happen:
Setting New Trends

By tackling your social challenge and introducing a new way of doing things, you’re already set-
ting new trends in the market and changing the behavior of your end users and other stakeholders.
It’s important to realize that this trend-setting can and must affect the pieces of the value chain
upstream and downstream of your venture. This is how you create a ripple effect! What patterns are
you a part of and what patterns do you want to change?
For example, an organization working on providing sanitary pads for school-aged girls and
young women to improve their attendance at school and, thus, their educational outcomes and
job opportunities in the future has a vested interest in gender equity in this community. Changing
norms and trends (like not prioritizing education for girls, like allocating fewer resources for
girls’ education outside of the school—such as school supplies, books, transportation—and like
discrimination toward hiring women and discrimination in wages) are part of the changes that
need to take place in the ecosystem in order for this organization’s work to be truly impactful. If
a student has full attendance and perfect scores at school but does not have any opportunities to
apply his or her knowledge and skills outside of school, then the impact on his or her life and his
or her household will be gravely reduced.
Health is another example. If your social venture is working on improving the supply chain for
medications or reducing the use of counterfeit drugs, then part of maximizing your social impact
is looking to influence others outside your venture. How can your work be used to leverage com-
munication channels and create awareness and to put pressure on others (especially government
and business leaders) to ban these practices or allocate more resources toward the reinforcement of
existing legislation banning these practices?
The pioneering efforts of the Daily Table Team demonstrate that if you put together the right
ingredients (pun intended!), you can create a market where none existed before, and markets speak
for themselves. Once there is enough demand in these neighborhoods, more health food ventures
are likely to open targeting low-income populations, and the food desert will begin to be chipped
away at.
Collaboration with Other Organizations

Just as we have seen Aravind eye hospitals provide technical support and consultations to other
hospitals in different parts of the world, each organization finds different ways of spreading their
method and reaching more people. Similarly, HLC and other education ventures make their mate-
rials publicly available and rely on other organizations to spread their work. Nuru aims to make
their poverty eradication model open source for other organizations to implement in other loca-
tions worldwide. Without this kind of collaboration, it would not be possible for them to reach
these entrepreneurs’ visions of educating every child, treating every case in need, and eliminating
poverty worldwide. More than just sharing your material, proactively creating partnerships and
pushing and supporting others to take on your work will allow you to have a greater collective
impact than your organization alone ever could.
Government Adoption
Adoption by the government is the ultimate way to take a successful social venture and apply it at a
much larger scale, institutionalizing key components. While this may need to be adapted for large-
scale government application, the potential is enormous. Using the independence and flexibility
associated with social entrepreneurship, you can create and demonstrate best practices and impact
and either partner with the government to grow beyond your own venture or have your methods
adopted and adapted for widespread implementation.
A successful case example here is BRAC. Originally founded as the Bangladesh Rehabilitation
Assistance Committee, it is now the largest NGO in the world. Often cited as the social venture
with the most impact worldwide, BRAC operates several social businesses within an overall non-
profit framework.*
BRAC’s approach is that large-scale change comes only by partnering with government, col-
laborating with other organizations, and through advocacy and policy-making at multiple levels:
* www.brac.net.
Advocacy
Evaluation and adaptation
Down-to-earth management
Training
Piloting
Vision
Listening to the people
Figure 13.6 Venturing beyond scale → reaching your goals.
local, national, and global. As such, advocacy and policymaking can be seen as the last stages of
scaling beyond your venture and reaching your goals (Figure 13.6).*
Advocacy and Policymaking

Influencing the way things are done outside of your venture can be viewed as the last step of scal-
ing, as illustrated by BRAC’s approach and others. You alone cannot reach all the people or all the
situations that would benefit from your intervention. How can you contribute to changing policies
that influence the work of others, not just your own work?
Building your advocacy platform is a key step. Once you have been able to demonstrate results
in your own measurable outputs and related social outcomes, you are now positioned to influence
the way others do things. Beyond providing your core product(s) or service(s) to your target audi-
ence, what do you want to change about the world? Legislation and government policies related to
your work itself or to the social outcomes you are working on are one important example.
Different ways to do this include joining forces with other stakeholders to lobby for policy
changes and for the allocation of resources to tackle the challenge you are addressing—and its
root causes—on a larger societal level. Creating and disseminating knowledge and other resources
based on what you have uncovered along your path can facilitate the spread of information, ideas,
and know-how. Engaging your end users in both of these tactics will amplify the results. For
example, organize a forum that brings together decision makers and other stakeholders or publish
your findings or viewpoints and have your end users and other stakeholders also contribute to the
writing or other forms of media. Albina Ruiz and Ciudad Saludable wrote the national policy that
changed the way local governments deal with waste management and with people living in slum
areas who started out as waste pickers—and are now service providers. Thirty years ago, if you had
asked whether this was imaginable, most people would have replied that it’s impossible.
* This figure summarizes BRAC’s approach as documented in Ahmed, S., and French, M., Scaling up: The BRAC
experience, BRAC University Journal. III(2), 2006, 35–40.
Together, we can build a wider lens that might allow for a multiplicative, rather than an
additive, effect of all our positive actions.
Collective Impact
Creating collective impact requires as much strategy and planning as you have committed while
growing your own organization (Figure 13.7). Identifying other organizations working in the
same field, strengths and weaknesses of each one, common versus complementary characteristics,
and joint networks will allow you to assess the range of targets you could jointly set. This requires
the formation of tangible alliances and networks beyond just general cooperation and cheerlead-
ing of each other’s efforts. Setting an agenda, allocating resources, and agreeing on accountability
for each organization involved will boost your ability to grow your cumulative impact beyond
your separate organizations.* This allows the sum of your joint impacts to be greater than the parts
that each organization alone might achieve.
Interview Box. Sir Fazle Abed, BRAC Founder and Chairperson
TC: Sir Fazle, your organization is cited as the largest NGO in the
world. What advice do you have for social entrepreneurs work-
ing on growing their ventures?
FA: We can never reach every person through direct service. It’s
important to change how people think so it can be a self-
propagating change. Take poverty alleviation for example. There
are millions of children without access to quality education.
BRAC works both to solve individual needs for education and
also to advocate for universal primary education.
TC: Tell us more about how you approach these different levels of service.
FA: It is very difficult to provide quality education. In Bangladesh, 95% of children enter
school and 20% drop out before finishing primary school, so only 75% are receiv-
ing sustainable primary education. Advocacy work is needed to get all children into
schools. But it’s more than that; education is not just going to school. Are they learning?
Is it effective quality or repeating rote learning? We need to look at how the schools are
performing. If students can think for themselves, they become a catalyst for change.
TC: What has been the most effective way of creating large scale change in your experience?
FA: You need partnerships with 3 others in order to have impact. Government is a big
actor to scale your own solution. We work with other NGOs for advocacy and policy
change; civil society needs to unite. It cannot be about each one doing his own work
without looking at the big picture. We need to put our energy and resources to alter
the systemic problem on a large scale.
* http://ssir.org/articles/entry/channeling_change_making_collective_impact_work.
Common
agenda
Backbone Shared
support measurement
Continuous Mutually
communication reinforcing
activities
Figure 13.7 Conditions of collective impact.

(From Hanleybrown, F., Kania, J., and Kramer, M., Channeling Change: Making Collective
Impact Work, Stanford Social Innovation Review blog, 2012.)
Building a Culture of Change

We’ve talked about building, maintaining, and nurturing a culture of innovation inside your own
organization. But how can you venture outside your own walls to foster and nurture a culture of
change, a movement of change outside of your venture? Well, this actually involves many of the
same approaches it took to foster innovation within your own work! Embrace failure—fail on pur-
pose, as Doug Rauch said. Fail in order to learn; test things until they reach their breaking point,
as we learned from Umesh Malhotra. Exchange knowledge, and build knowledge by bringing
together different perspectives, as Libby McDonald shared with us. We saw how Jake Harriman
found others to help him with the parts he himself didn’t feel equipped to tackle; we saw how
Willy Foote brought together different players from completely different ecosystems to create one
new ecosystem working together for positive change. We heard from Thulsi Ravilla how you have
to constantly test your own assumptions. As Catlin Powers and Laila Iskandar pointed out, no
one has the complete picture when they first start. You just do the best you can, and share your
successes and failures along the way.
Sharing Failures
Please remember what we talked about in Chapter 4, when you were designing your solution.
Failing is part of succeeding; it’s the first several attempts required to get you to that next try
where success is finally reached. Sharing your failures is as important as sharing your successes.
When you’re first designing your solution, deciding on your distribution channels, fleshing out
your theory of change, building your process map, and all these many moving parts that you’ve
accomplished throughout this textbook, you’re basically just trying things out. It might look per-
fect on paper, but when you come to implement it, it might turn out completely different. This is
okay! You tried your best to increase your chances of success at that first attempt, by co-creating
with the community, developing user-driven designs, using various planning tools and templates,
and building the best team you possibly can. The rest is up to trial and error—there’s no denying
that this is a huge part of it. Take the leap! And if you land in the wrong place, don’t be ashamed
to brush yourself off and start all over again.
Just make sure you document your trials and errors, not only for your own internal records
but for others to build on. This is how we incrementally push forward the boundaries of human
knowledge. Scientists conducting an experiment note in detail the steps they took and the out-
comes of each, and keep detailed logs so that they’ll be able to replicate if and when needed, and so
that others can too. So too should a social entrepreneur take on this additional burden of tracking
and reporting herself.
Knowing which variables you combined leading up to your success—or your failure—will
allow others to figure out for themselves whether those variables might work in different scenarios.
Perhaps a factor of your failure, if altered in a different setting, could make that failure into a suc-
cess for the next social entrepreneur.
Sharing Successes
Similarly, can you create a “testing package” for others so that they can test out whether your suc-
cesses might work for them too? Imagine the ripple effect you could have if your own model could
serve as a prototype for others to build on (Figure 13.8).
Don’t Forget the Underlying Theory

Don’t forget, you have built your social venture around a specific theory of change, which has a
number of underlying assumptions. If your venture works, it’s because those assumptions hold and
your product or service will create the intended outcomes for the target audience and entry point
you’ve identified. All these moving parts may not hold in other settings! This is why it’s important
to think about what parts of the theory of change are transferable or generalizable and what parts
are context specific. Then, before others try to replicate your work, they can test out the assump-
tions in their own specific context that they’re working in.
Don’t Forget to Celebrate Your Successes!

If you’ve made it all the way to this paragraph, this is where you’ll receive a huge congratulations.
To get here, you’ve been required to put away your fears, look at the world through completely
Proto-
types tested Your bigger,
that model better
you models
becomes for
a proto- others
type to build
Figure 13.8 Collective learning and iterating.

different lenses, push yourself to try different things, and try to find answers to seemingly unsolv-
able problems. You have only just begun. By taking the first step, you have joined the ranks of
social entrepreneurs working to change the face of the social challenges we face in today’s world.
The more people we can recruit and train into this force for good, the more we stand a chance at
leaving behind positive change.
Avoiding a Bubble
How can we avoid unintentionally creating a bubble around ourselves? We have watched as vari-
ous bubbles have burst for those before us—most readers will remember the “dot com” bubble of
the late 1990s when everyone thought that Internet start-ups were all the rage. Remember what
we said in the pitching and networking chapter: don’t get swept up in the hype. Stay focused on
what is true and tangible, stay connected to the people you are co-creating with, and stay in touch
with their reality.
The best way to avoid a social entrepreneurship bubble is to recognize its limitations. Social
entrepreneurship is not a prescription to solving all the world’s problems; there are many problems
that need to be solved by governments and by the larger private sector being more responsible. We
are not practicing social entrepreneurship for the sake of it. It is a means to reach an end, which is
to create positive social outcomes. The goal is not to create parallel systems, but to provide a tan-
gible, effective, scalable solution. If governments and other sectors can work together to offer our
solution and penetrate more widely and deeply, then that is the golden standard. Better yet, if our
solution effectively zaps at the roots and the challenge ceases to exist—or has been transformed
into something positive—then we have reached our ultimate goal. We have become obsolete.
Remember, penetrating more widely and deeply requires that solutions be adapted and repli-
cated to work in multiple different situations. There are no one-size-fits-all problems nor one-size-
fits-all solutions. The most likely outcome is that the solution we offer will need to be tailored to
each local context and added to; supplemented and complemented; tracked and monitored and
evaluated. We need to be prepared for this by mobilizing local and global resources and capacity
to do that in a timely manner. At the end of the day, it’s about the people you are co-creating this
solution with. Whatever doesn’t make sense for them doesn’t make sense to pursue.
Recap
So, now it’s your turn to tell us, what does social entrepreneurship mean to you? At the beginning
of this textbook, you were challenged to find new ways of doing things, to think like a child, to
question all assumptions. That includes questioning and building upon the framework presented
to you in this book! Can you find a better way of doing it? Chances are, you already have! Or,
hopefully, you are well on your way.
As a reminder, this framework has been built upon the collective experience of other social
entrepreneurs before you, and presented to you to help you get started in taking the first steps of
your social entrepreneurship journey. There’s no reason to start from scratch; it’s good to stand on
the shoulders of those before you. But don’t forget when you get up there to look around you and
ask yourself how things could be done better. Then brace yourself to support others in climbing
up even higher!
Taking the Next Steps Together

Social entrepreneurship as captured by the principles and frameworks presented in this book
is not the be all and end all of solving the world’s challenges. Social ventures can’t solve every-
thing. The biggest and most striking example of that are the humanitarian crises we face every
day, where immediate relief is needed and people just have to help each other. Social entrepre-
neurship is just one more way we can make a difference, and it has the potential to make a huge
difference. It’s just important to know your limitations alongside your potential. Above all, it’s
important to be humble. Don’t play God. Look for every opportunity to learn from your mis-
takes or your lack of knowledge to fill in the gaps. The social entrepreneur is one tiny person.
One tiny person can make a difference. But she or he cannot do it alone. The more people you
can mobilize, the more systems and sectors you can bridge together, the larger scale and depth
your impact will have.
Keep questioning, and don’t get complacent. Questioning all assumptions means questioning
yourself too, not just the status quo. Look for any evidence that might indicate you are mistaken.
Incorporate it into your work. Keep collecting as much evidence as you can. The only thing we can
know for sure is that we’ll never have all the answers. But eventually, hopefully, collectively we’ll
find as many answers as possible.
Exercise: Fueling Growth

After building a healthy and viable venture, it’s time to focus on growth. Let’s explore the multiple
dimensions and directions in which you can grow your impact to reach your ultimate goals:
(250-word limit per question unless otherwise specified. You may need to write more for your own
records, but come back and summarize here.)
1. Within the scope of your theory of change, how can you grow to reach more people? What
data are needed to determine the right timing and directions? Do you have these data?
2. How can your impact on each person be greater in magnitude and duration? What do your
preliminary results indicate are the most impactful components of your solution?
3. What ripple effects is your solution having on society? How can you actively and consciously
grow these?
4. What do you need to produce to fulfill your response to the first three sets of questions? Is it
more products or services, more scale, more follow-up with customers, more involvement in
external activities outside your venture?
5. What does the communication strategy you prepared in the last chapter require in terms
of advocacy? What policies exactly are you advocating for, and who are the key players you
need to mobilize in order to change these policies?
6. How can you look beyond your own venture to create collective impact with others, such
that the whole is greater than the sum of the parts? What might be some potential common
agendas, shared measurements, mutually reinforcing activities, communication needs and
other resources needed? (800-word limit total for question 6, use bullet points)
CHAPTER SUMMARY
◾◾ Growing your social venture is about more than growing your operations. It’s finding
new ways to reach your target audience and to create ripple effects in the community.
It’s also about venturing outside your own work to join forces with others.
◾◾ Careful assessment of your preliminary data is needed to help determine when and
how you can grow your products, services, or reach.
◾◾ But most social entrepreneurs will not be satisfied by simply scaling. They envision
something much bigger than a linear path that goes up, up, up. What most social
entrepreneurs see is a multidimensional growth path that disrupts everything in its way!
◾◾ Growing outside your social venture means partnering with other organizations, lead-
ers, and stakeholders to change the frameworks that you and others operate in.
◾◾ Mechanisms for expanding beyond your venture might include government adoption,
collaboration with other organizations, advocacy and policymaking, planning for and
measuring collective impact.
◾◾ It’s important to share and celebrate your successes and also to share your failures so
that others can build on them.
◾◾ Most importantly, keep questioning. Don’t get complacent, and don’t get comfortable.
Remember the social challenge you set out to tackle, and remember that you need oth-
ers, to truly make this obsolete.
Company profile: BRAC, www.brac.net.

Founded in 1972; Bangladesh.
Product/service: Multiple social businesses and programs operating worldwide including a
rural credit and training program launched in 1979, which paved the path for Grameen and
other subsequent initiatives.
Goal: To empower people and communities in situations of poverty, illiteracy, disease, and
social injustice.
How it works: Based on the premise that poverty is a system and its underlying causes
are manifold and interlinked, BRAC provides people with tools to fight poverty across all
fronts. They have developed support services in the areas of human rights and social empow-
erment, education and health, economic empowerment and enterprise development, liveli-
hood training, environmental sustainability, and disaster preparedness. They operate social
enterprises and create value chain linkages that increase the productivity of members’ assets
and labor and reduce risks of their enterprises.
Business & Management
Social entrepreneurship is a revolution occurring around the world today. People from
all walks of life are developing and implementing innovative, effective, and sustainable
solutions in response to social and environmental challenges. These solutions include
products, services, and interventions brought to market by new startups and existing
organizations, both for-profit and non-profit.
Introduction to Social Entrepreneurship summarizes the basic steps and tools

needed to understand the challenge you are tackling, develop potential solutions, build
a business model, and measure and grow your impact. Featuring case studies and
interviews with leaders in the field, this comprehensive guide spans multiple sectors,
including health, the environment, education, agriculture, commerce, finance, and retail.
Designed for readers of all backgrounds, this book will change the way you look at
today’s world and what you do about it.
K25430
ISBN: 978-1-4987-1704-5
6000 Broken Sound Parkway, NW
Suite 300, Boca Raton, FL 33487 90000
711 Third Avenue
New York, NY 10017
an informa business 2 Park Square, Milton Park
www.crcpress.com Abingdon, Oxon OX14 4RN, UK 9 781498 717045
w w w.crcpress.com

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Introduction to

No claim to original U.S. Government works

International Standard Book Number-13: 978-1-4987-1705-2 (eBook - PDF)

Preface: A Letter to the Reader...............................................................................................xvii

Tailor to the Local Population..................................................................................... 119

Pros and Cons of the Logical Framework....................................................................145

Teresa Chahine is the Social Entrepreneurship Program Leader at

How This Book Works

Why Is Social Entrepreneurship Different

Little/no Plentiful Little/no Plentiful

Shift the existing distribution to increase overall access Both

Little/no Plentiful Little/no Plentiful

100% social 100% commercial

Nonprofits Hybrid models For-profits

Figure 1.3 Social entrepreneurship occupies a spectrum.

How Is Social Entrepreneurship Different

Institutions Supporting Social Entrepreneurs

Common Characteristics in Social Entrepreneurship

Table 1.1 What Is a…?

Social enterprise A company or organization that provides a social product or service at

BOX 1.1A SELECT INSTITUTIONS SUPPORTING

BOX 1.1B OTHER POPULAR ONLINE RESOURCES

While financial viability is a key to success, in social entrepreneurship, it is considered a

* For more information on Kiva, visit www.kiva.org.

What Are Some of the Basic Skills Needed

Social entrepreneurship is… Skills required…

Disruptive The Entrepreneurship Component:

Evidence based The Social Component:

Figure 1.4 Defining characteristics of social entrepreneurship

How to Use This Book

Interview Box. Bill Drayton, Founder and CEO

TC: The term social entrepreneurship is often traced back to

Cases: in-depth examples Toolbox: tools and

Figure 1.5 The different kinds of learning tools in this book.

◾◾ A step-by-step guide for building your venture

1. Define your challenge (Chapter 2)

• Sociodemographic characteristics: age, gender, income, education, occupation, and

6. Funding and structuring your venture (Chapters 9 through 11)

◾◾ Characterize a social challenge of your choice in an evidence-based manner using available

Summary and Next Steps

Exercise: Your Assignment for This Chapter

Social Ventures Mentioned in This Chapter

Company profile: Grameen Bank, www.grameen-info.org.

Company Profile: Kiva, www.kiva.org.

Company Profile: City Year, www.cityyear.org.

Characterizing Your Challenge

PART ONE: INTRODUCTION

Two Important Viewpoints

Seeing the Opportunities

Understanding the Challenges

Scope of This Chapter

Approaching Your Topic

Keeping asking “why?” until you cannot ask it anymore.

Think Like a Child

Question All Assumptions

PART TWO: A FRAMEWORK FOR CHARACTERIZING

What Are You Trying to Change?

Where Are These People?

Why Has This Challenge Arisen, and Why Has It Persisted?

Dimensions of the Social Challenge

Different Types of Data

Prior Attempts to Conquer the Challenge

Interview Box. Matt Flannery, Kiva Cofounder

TC: You are often cited as a leading example of a social entrepre-